Billing and payment methods and systems enabling consumer premises equipment

ABSTRACT

The present invention teaches a variety of systems and methods enabling renewable energy consumer premises equipment (CPE) such as dual metering techniques. The present invention contemplates, among other things, supporting, by increasing a likelihood of meeting financing obligations, a consumer purchasing, leasing, installing and/or maintaining renewable energy CPE for power generation at a consumer premises. The renewable energy CPE may be attached to a structure on the consumer premises, disposed free standing on the consumer premises, or utilized through any other suitable means on the consumer premises.

CROSS-REFERENCE TO RELATED APPLICATIONS

The present application claims priority under 35 USC §119(e) to Kremen'sU.S. Provisional Application Ser. No. 60/853,050, filed Sep. 17, 2006,which is incorporated herein by reference. The present application isrelated to Kremen's concurrently filed applications entitled: 1)SYSTEMS, METHODS AND FINANCIAL INSTRUMENTS FOR RENEWABLE ENERGY CONSUMERPREMISES EQUIPMENT FINANCING; 2) METHODS FOR COST REDUCTION ANDUNDERWRITING CONSIDERATIONS FOR FINANCING RENEWABLE ENERGY CONSUMERPREMISES EQUIPMENT (CPE); 3) METHOD FOR UNDERWRITING THE FINANCING OFSOLAR CONSUMER PREMISES EQUIPMENT; 4) SYSTEMS AND METHODS OF REDUCINGFINANCING COSTS FOR RENEWABLE ENERGY CONSUMER PREMISES EQUIPMENT; 5)METHODS, SYSTEMS AND FINANCIAL INSTRUMENTS FOR FINANCING RENEWABLEENERGY CONSUMER PREMISES EQUIPMENT, all incorporated herein byreference.

STATEMENT REGARDING FEDERALLY SPONSORED RESEARCH OR DEVELOPMENT

Not applicable.

THE NAMES OF THE PARTIES TO A JOINT RESEARCH AGREEMENT

Not applicable.

INCORPORATION-BY-REFERENCE OF MATERIAL SUBMITTED ON A COMPACT DISC

Not applicable.

BACKGROUND OF THE INVENTION

The present invention relates to financing consumer equipment thatgenerates power (electricity) from a renewable energy source and islocated on a consumer's premises.

BRIEF DESCRIPTION OF THE INVENTION

Electricity or power (hereinafter used interchangeably unless otherwisenoted) is an essential part of modern life. In residences, businesses,in institutions and in other locations, electricity is used in numerousways by the consumer or end user (hereinafter “consumer”).

Power plants generate electricity that is delivered by utilities througha network of transmission and distribution lines. This network ishereinafter referred to as the “power transmission and distributiongrid,” “the electric grid,” “the grid” or “power grid.” In general, apower system includes a power plant, power transmission and distributiongrid (including appropriate transformers for stepping up and down thevoltage as required) and the consumer's power (i.e., electricity)equipment residing on the consumers' premises (real property).

The demarcation line between the power grid and the consumer location istypically the electric meter, which is owned by the utility and the maincircuit panel, which is owned or controlled by the consumer. FIG. 1illustrates an example of a prior art power system.

As discussed, power plants generate the electricity and transmit anddistribute it via the power grid. These power plants generateelectricity based on different sources of energy. Such sources include,but are not limited to, fossil fuels (e.g., coal, natural gas or refinedoil products), nuclear energy and renewable energy sources such as water(hydroelectric power), wind, biomass and solar energy (hereinafter“renewable energy sources”). Individual consumer power usage orconsumption is measured with a power meter (or “meter”). The metermeasures watts, which is a unit of energy or power. A watt is voltagemultiplied by current. (While there are differences in the definitionsof watts for both AC and DC power, the units of measure for both (watts)are treated similarly for purposes of this application.) A Kilowatt is1,000 Watts. The meter also measures Kilowatt-hours (KWH), which isusage of power or energy over time or the kilowatts being used times thenumber of hours used. Most consumers pay electric rates based on KWHunits.

The entities that purchase, sell or market power may vary. In general,these are referred to as utilities. In addition, these entities may be anot-for-profit municipal entity such as the Franklin Municipal Power andLight (electricity provider in the City of Franklin and parts of theCity of Suffolk, Southampton and Isle of Wight, Va.) or HendersonMunicipal Power & Light or HMP&L (owned by the City of Henderson, Ky.)an electric co-operative owned by its consumers such as CentralWisconsin Electric or Northern Virginia Electric Cooperative (NOVEC), afor-profit company owned by stockholders such as Pepco Holdings, Inc. orDominion Virginia Power (often called an investor-owned utility).

However not all utilities own their own electrical generation equipment:distribution companies and retail services may sell power to consumers.Examples of power marketers include Green Mountain Energy or Duke EnergyMarketing Corporation. Some federally owned or affiliated entities alsopurchase, sell, or market power. Examples of federally owned entitiesinclude Bonneville Power Administration (BPA) or the Tennessee ValleyAuthority (TVA). Other sources of electricity may include otherutilities, power marketers and independent power producers (IPPs). IPPs,such as Calpine Corporation or certain members of the Independent EnergyProducers (http://www.iepa.com) generate electricity and then sell theirpower in wholesale markets (such as California's PX). Any entity thatpurchases, sells or markets power to (or from) the consumer of power orhas the primary relationship with that consumer is for the purpose ofthis application known as a utility.

The origin of the electricity use by the consumer may also vary.Utilities may generate, transmit and distribute all of their ownelectricity. Alternatively, utilities may purchase power on thewholesale market from other sources off the transmission lines. Thewholesale market is a place in which power is bought and sold byentities that sell electricity to the consumer. Alternatively, theutilities can source (i.e., purchase) electricity from smallerresidential, business industrial, commercial and institutional users ofelectricity that have the means to produce the electricity (forthemselves) and sell any excess back (known as buyback) to theirutility. Regulators regulate the price and terms of these buybackstransactions.

All electricity generation, transmission, distribution, purchases,trading, marketing and sales are generally regulated by two authorities:The Federal Energy Regulatory Commission (FERC) and the State PublicUtility Commissions (PUCs). The Federal Power Act of 1934 as amendedcreated FERC and has jurisdiction over interstate transactions andfacilities as well as wholesale sales. The PUCs have jurisdiction overintrastate trade of electricity and regulate retail rates for consumers,approve sites for generation facilities, set buyback prices and termsfrom smaller, localized producers and issue relevant environmentalregulations. Some States or their PUCs (to be used interchangeably inthis application) allow deregulation of retail prices, the introductionof competition between utilities and the buying, marketing and sellingof power within the State.

Pricing of electricity can also vary greatly depending on the regulatoryauthority that regulates the source of the power. A consumer's bill isbased on many factors including, but not limited to the price perKilowatt-hour and the amount of kilowatt-hours consumed or used by theconsumer for a given time period that the bill covers. In addition tothe kilowatt-hour charge, there are other extras included in anelectricity bill such as state and local taxes, and other costs. Suchother costs include, but are not limited to, equipment maintenancecosts, deprecation of generation and distribution equipment,transmission costs, decommissioning costs for nuclear plants, retail andwholesale competition, weather, subsidies of varies types, etc. SeeEnergy Information Administration www.eia.doe.gov for more details.

Daily demand for electricity is usually highest in the afternoon andearly evening (on-peak). Consumers may pay different prices duringdifferent parts of the day (collectively known as “Time of Day usagepricing” or “Peak pricing”). Seasonal peaks are caused by regionalweather and climatic conditions. The highest usage seasonal peak usuallyoccurs in the summer when air-conditioning use is greatest. The priceper Kilowatt-hour for electricity (power) may also change depending uponmonthly (or other time period) cumulative usage (tiered pricing) as wellas time of day considerations. In this way, pricing increases in “steps”as usage increases. In other words, the greater the electricityconsumption, the greater the increase in price per kilowatt-hour chargedto the consumer. The rise in price will increase beyond a baseline usagelevel. A baseline level is the minimum price charged for electricity forlow usage levels. The baseline level, like many other issues involved inenergy is set taking into account public policy issues and usagepatterns.

Consumers face price increases for electricity over the long-term, netof any increases due to inflation. Electricity prices have steadilyincreased over the long-term (with decreases and increases in short-termperiods). For example, residential electricity prices were predicted toincrease by 10.2 percent in 2006 compared with 2005 because the costs offuels for electricity generation have risen and retail electricity pricecaps have recently been loosened in some States, particularly in NewEngland and the South Atlantic region, as a result of restructuredelectricity markets(http://www.eia.doe.gov/emeu/steo/pub/contents.html).

While an increase in an electric bill is unfortunate for consumers, anincrease in the demand for electricity has a more disastrousconsequence. The long-term demand for electricity is projected toincrease. For one thing, the use of power consuming devices such asair-conditioners and computers has increased. Temperatures appear to beincreasing globally. An increase in demand requires an increase inelectricity production. The production often times places a strain onexisting power plants. Building new power plants is expensive andsubject to strict environmental review and widespread opposition.Consequently, there is a need for alternate sources of energy tosupplement existing sources. Renewable power sources are one suchsource. In fact, renewable energy sources are quite desirable.

Specifically, renewable energy sources cause less environmental harmthan non-renewable sources of power and are therefore socially andpolitically acceptable energy sources. There are large organizations andpowerful figures that believe the exploration for and the pollutantsproduced by fossil fuels are destroying the environment. Nuclearelectric power generation has opponents that are concerned aboutradioactive waste disposal as well as nuclear proliferation issues.Renewable electricity development is therefore a priority in manycircles for these reasons alone. Some consumers will pay premium pricesfor electricity derived from renewable energy sources just on the basisof it helping the environment.

In addition, renewable, local energy generation is useful to generatepower for back-up purposes in the event the utility sources areterminated (e.g., because of an outage or and arrangement with theutility. For example, under certain arrangements, the utility willterminate power supply to specific consumers during peak hours or casesof demand exceeding supply capacity. The consumer will receivediscounted power rates for such concessions. This is called aninterrupted power contract.

Smaller renewable energy sources are also advantageous because theygenerate energy locally (i.e. not at a centralized power plant). Localenergy generation reduces strain on a utility power grid (in which arealmost universally underinvested), and therefore increasingly unable torespond to demand. While new grid infrastructure is required to meetsuch demand, the reality is new infrastructure is expensive and hard toget approved. The general population resists the construction of thisnew infrastructure. The prospect of additional transmission lines andother electrical components adjacent home dwellings and office buildingsposes real or perceived safety concerns.

Even with population approval, infrastructure will continue to face anuphill battle. To obtain proper approval, a request must endure acomplicated and time consuming political process (e.g., passing througha maze of Federal, State and local government offices). For thesereasons, local power generation is not only good public policy, but aneffective means to avoid a political process in which additional powerinfrastructure projects are subject to endless investigative processesto determine the purpose, need and environmental impact statements. Fora current example, see San Diego Sunrise Power Transmission Project(http://www.cpuc.ca.gov/static/hottopics/1energy/a512014.htm). Sufficeit to say, renewable, localized energy sources are quite advantageousand desirable.

Local solar energy is one of the more desirable renewable sources ofenergy. For one thing, solar energy can essentially be harnessed in mostdeveloped country locations with solar access. For another, solarequipment consumes no fossil fuels and generates no air pollutants. Theuse of solar equipment is generally regarded as environmentally safe. Inaddition, there are direct financial motives for investing in solarenergy for electricity production that complement any consumer personalor public policy considerations. Utilities in many States are required(or voluntarily do so) for public policy reasons to credit or actuallybuy excess solar electricity generated by the consumer. Specifically,some States require utilities to derive a portion of their sales fromrenewable energy sources. Consequently, if the utilities cannot satisfythis requirement, then they must purchase the electricity from othersuppliers such as an IPP or from consumers with solar equipment.

In some States, consumers are paid for surplus power (electricity)generated (as opposed to credits that can only be applied for limitedfuture use such as in California). Such payments are usually in the formof certificates or could be actual cash payments. For example, NewJersey has a Solar Renewable Energy Certificate program (“SREC”). Seehttp://www.nicep.com/srec/index-primary.html. According to New Jersey'sSREC program, the utility will issue a SREC for every 1,000 KWH that agrid tied solar system generates. The SREC can then be sold or tradedindependent of the power (typically via a broker or aggregator). NewJersey's SREC Program assists in the sale of SRECs to electric suppliersthat are required to invest in solar energy purchase of SRECs. NewJersey's purchase requirement is expected to increase each year. It isprojected that New Jersey's SRECs' equivalent will total 90 MW of solarelectricity in 2009 (enough to power 8,000 homes). In sum, the specificterms of payments and credits (i.e., net metering or dual metering asdescribed below, certificates etc.) vary from State to State and utilityto utility.

In addition to the financial benefits described above, State, Federal orother jurisdictions offer financial incentives that reduce the costsassociated with the purchase, installation and sometimes the operationof solar equipment. For example, Illinois State offers a 30% rebate (upto a maximum $10,000) for the purchase of solar equipment. The State ofCalifornia offers a rebate of $2.30 per watt of new capacity purchased(amount of rebate to change over time subject to certain caps and otherconditions). In general, the incentives vary by State. Federal law alsooffers certain tax credits for the purchase of solar equipment (Seewww.dsireusa.org for more details on State and Federal incentives forsolar equipment). Note that solar energy is one type of renewal energy.That is, other renewable energy sources may be eligible for rebates,credits, subsidies and other favorable treatments (as discussed below).(This application applies to all other renewal energy (andnon-renewable) sources.)

One problem with some of the rebates or credits is that they are notreceived at the same time the equipment is purchased. For example, theCalifornia solar credit is running up to six months behind certifiedinstallations.

In order to receive these benefits, solar equipment typically must beproperly connected to (i.e., integrated) the power (electricity) grid ofthe local utility in accordance with utility rules. This is known ason-grid, grid-tied, utility-interactive (UI) or grid inter-tied solarequipment or systems. These systems generate solar power and route it tothe power grid. The solar power (electricity) offsets consumerelectrical consumption and, in some instances, even turns the electricmeter backwards by routing unused power onto the grid to supply otherconsumers. In many States, the utility actually credits a homeowner'saccount for excess solar electricity produced. This amount sometimes canbe applied to other time periods when the system produces less or intime periods when electrical consumption is greater (the electricity attimes may be used as a credit or may be lost in a given time period asdictated by the States). This credit arrangement is called net meteringor net billing which will be discussed in more detail below. The pricingfor such credits might be the wholesale price of the electricity or someother pricing dictated by the individual States' PUCs. These credits cansubstantially reduce or eliminate an electricity bill.

While the Federal and State incentives described above are significant,the remaining costs for the purchase of solar equipment may be beyondthe amount of cash a consumer has on hand or wishes to commit. Forconsumers that wish to displace 75% of the consumer's electricityconsumption, for example, the cost for the purchase of solar system canactually reach as such as $60,000 or more. On average, residentialyearly consumption ranges from 2,000-5,000 KWH. The price for thepurchase of solar systems (photovoltaic cells, inverters and otherauxiliary equipment) is estimated at $9 per Watt. Consequently, thetotal cost (on average) of such equipment ranges from $18,000-$45,000.In Illinois for example, a solar system designed to displace 75% ofelectricity consumption may cost about $30,000 ($45,000 less Staterebates and grants). In San Diego, the purchase price of solar equipmentis estimated to cost $20,160 ($37,800 less State rebates for 75%electricity displacement). These are only examples of the costs. Theactual cost of the solar equipment or system may vary widely dependingupon installation complexity, location, component availability, and thesize of the installed system. Suffice it to say, the costs for purchasemake solar equipment prohibitive for most consumers without financing.(A good analogy is the purchase of a new automobile. That is, mostconsumers would be prohibited from purchasing automobiles withoutfinancing options.)

There are several existing financing options for the purchase of solarequipment. These options are predominantly based on traditionalfinancing products like a mortgage or deed of trust, as well as the lesscommonly used sale purchase contract or conditional sales purchasecontract. While these financial instruments differ in legal structure,they are all methods for a lender to obtain a security interest (orlien) to secure their loan with the borrowers' real property. For thepurposes of this application, these methods are collectively referred toas a mortgage, real property security interest or real propertymortgage.

Real property mortgages are available in many flavors. For consumersthat wish to purchase a new home or building there is the purchase moneymortgage. For those consumers who renovate an existing home or buildingthere is an option of an equity line of credit or second loan. Mortgagesare also available for consumers that wish to refinance their existingproperties. However, these mortgages are not advantageous for thepurchase of solar equipment. For consumer's intending to buy a new home,it would be difficult logistically to buy the property and the CPEsimultaneously.

For consumers wishing to purchase solar equipment for an existing home,the consumer would apply for a second mortgage (or refinance the firstmortgage or obtain a line of credit) in which the successful loanrecipient may receive a loan. Second mortgages, however, will likelyhave higher interest rates because they second in priority forcollection security behind the first mortgage (from credit perspective).Lines of credit or home equity loans usually have commitment, annual,use or check issuance or cash advance or other service fees, some ofwhich accrue whether or not the line of credit is used. In all cases(first mortgages, refinances, second mortgages or lines of credit), theentire subject property would be used as collateral for the loan.

There are other disadvantages to mortgages as a vehicle for solarequipment purchase. In order to obtain a mortgage for real property, theconsumer must provide proper information and documentation supportingthe application including financial background such as assets, bankaccounts, salary, loans, credit card debt and other debt. For newproperty, a down payment will be required which ranges from 0-30% of thepurchase price. The consumer's debit to income ratio, loan to home valueratio, the consumer's credit information including the consumer's creditscore (known commonly as a credit or FICO score) and other underwritingcriteria will ultimately determine whether the consumer is awarded theloan and the loan amount. From the loan applicant's viewpoint, theprocess is time consuming with limited success in obtaining the loanunless the applicant satisfies lender's detailed requirements.

In addition to those disadvantages, an applicant for a mortgage willtypically be charged fees which are a subset of what is collectivelyknown as closing costs. Examples of such closing costs may be found inAppendix A below. Even with advertised “no-fee” mortgages, theconsumer/borrowers are charged the foregoing fees (in reality) in theform of a higher interest rate. All of these fees or charges are bothconsiderable and economically impractical in view of the size of theloan request. There may be other costs including pre-payment penaltiesfor loans that pay off existing loans.

There are other options for financing solar equipment. For example, alimited number of financial institutions or lenders offer another typeof loan called an Energy Efficient Mortgage (EEM). The EnvironmentalProtection Agency (EPA) offers a financing program with lenders toprovide special financing for buyers of energy efficient homes. Thesefinancing options are similar to the mortgages described above, but suchmortgages are offered to potential homeowners that wish to purchase ahome or refinance a home that is energy efficient or will be energyefficient after energy saving equipment is installed. In some instances,an energy rating must be obtained to determine the cost-effectiveness ofthe improvements. See “The Borrower's Guide To Financing Solar EnergySystems, A Federal Overview,” Second Edition, U.S. Department of Energy,1999. In these arrangements, the lenders require similar financialinformation from the potential homeowner as described above and willperform the same analysis to determine whether the potential homeowneris worthy of the loan. In addition, the potential homeowner must submitadditional information that supports a claim of energy conservation forthe property or the lender will provide an evaluation as part of theclosing costs for the loan.

In summary, while these financing options (mortgages) may be adequate,they are not optimal from the perspective of both the lender and theconsumer (residential) borrower. From the viewpoint of a borrower,secured loans such as real property mortgages (of any type includinghome equity, home line of credit, or EEM) are difficult to obtainwithout the proper financial background. Borrowers must adhere to lenderrequirements and guidelines or pay more. In addition, new home loanborrowers must put down a substantial down payment or pay more ininterest costs. As part of the loan application costs, borrowers mustalso pay for costs such as appraisals, title insurance, inspection fees,closing costs and escrow accounts. In view of the size of the loansneeded for the solar equipment (e.g., $50,000), these costs do not makeeconomic sense for the consumer as their average cost to obtain is inthe thousands of dollars.

Lenders find mortgages equally suboptimal for financing solar equipment.In the event the borrower defaults on the mortgage, the lender mustinstitute costly and lengthy foreclosure proceedings on the subjectproperty. The process is not only time consuming and expensive, but thelender becomes an unwilling owner/possessor of the real property. Thesedisadvantages affect secured lenders of all types regardless of thecollateralized property (e.g., residential, business, institutional orother). The prospect of these costs and administration are high comparedwith the size of a loan needed to finance solar equipment, which mightbe $50,000 or more or as little as $10,000 or less. Suffice it to say,traditional mortgage financing do not fully meet the needs for lendingfor the purchase of solar CPE.

There are other secured financing methods for the purchase of solarequipment. For example, personal property loans or personal propertysecurity interest (sometimes referred to as chattel mortgages or chattelloans) are a type of mortgage that is secured by personal propertyinstead of real property. In another words, a personal property securityinterest is a lien that provides a lender a security interest inpersonal property, as opposed to real estate (land, buildings) pledgedas collateral for repayment of a loan. Personal property can be any kindof movable property, such as automobiles, jewelry, etc. A personalproperty security interest is normally used in financing consumer goods,such as household appliances; the lien terminates when the obligation ispaid. Personal property interests are usually evidenced by a UCC(Uniform Commercial Code) filing at the Secretary of State or othergovernment office in the State in which the personal property islocated.

For non-business consumers, personal property loans or interests aredisadvantageous for the purchase of solar equipment. The interestpayments for personal property loans are usually not tax deductible on afederal or state level. This deprives the consumer of a very importanteconomic benefit. In addition, the interest rates for personal propertyloans are typically higher because the subject property is personal, notreal. The personal property can be removed from the lender's reach ormade less valuable. Consequently, the loan is a greater risk for thelender (than a real property mortgage). In general, banking regulatorsmuch prefer mortgages for real property.

Further, when it comes to solar equipment, lenders do not know how tocharacterize such property for credit and loan purposes. Because of theintrinsic nature of solar equipment and the mechanism used to attach itto the subject real property, lenders do not know whether solarequipment constitutes “real property” (i.e., a fixture under the law) orpersonal property under the law. The particular characterization for thesolar equipment will dictate, among other things, the proper locationfor recording or filing (perfecting the security interest). Real estateis recorded in the county office in which the property is located. Onthe other hand, personal property is typically filed at the office ofthe Secretary of State in which the personal property is located.Because of this confusion, the lenders are apprehensive about suchloans. Such apprehension usually translates into higher interest rateswith stricter restrictions.

Unsecured personal loans are another type of financing option for aconsumer. They are also not an optimal choice for lenders and borrowers.Unsecured loans are typically not available at affordable interest ratesfor the vast majority of consumers because they do have adequatefinancial background and the proper relationships with lenders toreceive such a loan. Lenders are cautious about making unsecured loansbecause such loans are higher risk than secured loans.

There is another financing option available to the consumer. In thisoption, the installer of the solar equipment may float (or advance) aportion of the purchase price for a solar equipment. The purchase pricemight also include the cost of installation. This is not attractive tothe installer because they must pay many of these costs upfront. In mostcases, the installers have limited working capital for such anexpenditure. For this reason, installers rarely offer their own directfinancing. If they do decide to offer financing, installers only offervery short-term financing. Distributors, dealers and manufactures do noteven offer financing (credit) for consumer solar equipment purchasing.

There is no financing program or product available that is advantageousto lenders that wish to offer loans and borrowers that wish to borrowmoney for the purchase of solar equipment. It would be desirable toprovide a method and/or system that would overcome the disadvantagesdescribed above with respect to the financing options for solarequipment.

SUMMARY OF THE INVENTION

The present invention teaches a variety of systems and methods enablingrenewable energy consumer premises equipment (CPE) such as dual meteringtechniques. The present invention contemplates, among other things,supporting, by increasing a likelihood of meeting financing obligations,a consumer purchasing, leasing, installing and/or maintaining renewableenergy CPE for power generation at a consumer premises. The renewableenergy CPE may be attached to a structure on the consumer premises,disposed free standing on the consumer premises, or utilized through anyother suitable means on the consumer premises.

According to one embodiment, a method of increasing the likelihood ofrepayment of a loan provided by a lender for the purchase of renewableenergy consumer premises equipment (CPE) by a customer is disclosed. Themethod couples the CPE to a power grid operable to receive at least aportion of the power generated by the CPE, measures power generated bythe CPE and delivered onto the power grid, and processes receivablesassociated with the power generated to an entity at times correspondingto power measurement to fulfill the customer's obligation to repay theloan. The processing can be accomplished by any suitable means such asdistributing and/or securing the receivables.

Another aspect of the present invention contemplates a business methodfor increasing a likelihood of repayment of a loan, lease or otherfinancial instrument provided by a lender for purchase, lease,installation, and/or maintenance of renewable energy consumer premisesequipment (CPE) by a consumer. This aspect contemplates measuring excesspower incrementally over a period of time generated by the CPE anddelivered onto a power grid, and processing receivables associated withthe excess power generated to the lender at increments corresponding toincrements that the excess power is measured. This enables the customerto fulfill the customer's obligation to repay the loan, lease or otherfinancial instrument through an entity.

Yet another embodiment teaches various methods for billing by an entityfor financing renewable energy consumer premises equipment (CPE)installed on a consumer premises. Here the CPE is capable of generatingpower, and at times at least a portion of the power is consumed by aconsumer associated with the consumer premises. According to one aspect,the present invention contemplates coupling the CPE to a power gridmaintained by a second entity, distributing at least some of the powergenerated by the CPE to the power grid, giving a monetary value to theat least some power generated by the CPE and distributed to the powergrid, and the second party making payment directly to the first entityfor the financing of the CPE.

An embodiment of the present invention teaches various methods offinancing at a purchase price the purchase of consumer premisesequipment (CPE) suitable for installation by a consumer and powergeneration or power use reduction at a consumer premises. Relatedembodiments identify whether at least one credit is associated with thepurchase and/or operation of the CPE by the consumer at the consumerpremises. Other embodiments take into consideration both subtracting anyassociated credits from the purchase price of the CPE and reselling ofthe CPE at a market rate, net any remarketing costs, in case of adefault by the consumer.

Further embodiments teach billing and payment systems for financingpurchase, lease, installation and/or maintenance of a renewable energyconsumer premises equipment (CPE) suitable for installation by aconsumer and power generation at a consumer premises. According torelated embodiments, the billing and payment system includes a powergrid, a power measuring device, and a billing mechanism.

The power grid is typically operable to distribute power to the consumerpremises, the power grid further operable to receive power from the CPE.The power measuring device is operable to measure power delivered to theconsumer premises via the power grid, the power measuring device furtheroperable to measure power delivered onto the power grid by the CPE. Thebilling mechanism is operable to determine on a periodic basis anyexcess value of power generated via the CPE over power delivered to theconsumer premises via the power grid. The billing mechanism may alsocredit any excess value generated by the CPE to an entity that financedthe purchase, lease, installation and/or maintenance of the CPE up to anamount owed by the consumer to the entity during a relevant period.

Another embodiment of the present invention teaches a variety of systemsfor enabling purchase, lease, installation and/or maintenance of solarpower generation consumer premises equipment (CPE) suitable forinstallation by a consumer and for power generation at a consumerpremises. According to these embodiments, the system includes afinancing mechanism, a power grid, a power measuring device and abilling mechanism.

BRIEF DESCRIPTION OF THE DRAWINGS

The accompanying drawings, which are incorporated herein and constitutea part of the specification, illustrate embodiments of the invention,and together with the general description given above and the detaileddescription of the embodiments including the Appendices A and B givenbelow, serve to explain the principals of the invention.

FIG. 1 illustrates a diagram of a prior art power system.

FIG. 2 illustrates a block diagram of a power system incorporatingconsumer premises equipment (CPE) for a real property structure.

FIGS. 2A-B illustrates net and dual metering arrangements, respectively.

FIG. 3 illustrates a method of financing the purchase of CPE inaccordance with an embodiment of the present invention.

FIG. 4 illustrates routine A shown in FIG. 3

FIG. 5 illustrates routine B shown in FIG. 3.

FIG. 6 illustrates routine C shown in FIG. 3.

FIG. 7 illustrates routine D shown in FIG. 3.

FIG. 8 illustrates examples of a power proxy shown in FIG. 7.

FIG. 9 illustrates examples of the attributes of power or CPE shown inFIG. 7.

FIG. 10 illustrates routine E shown in FIG. 4.

FIG. 11 illustrates routines F, G, H, I, J and K shown in FIG. 7.

FIG. 12 is a flowchart of a method of financing the purchase of CPE inaccordance with another embodiment of the present invention.

FIG. 13 is diagram of consumer power consumption.

FIG. 14 illustrates a pool of individual loans for a collateralizedpower obligation (CPO) in accordance with another embodiment of thepresent invention.

FIG. 15 illustrates a CPO in accordance with the embodiment of thepresent invention shown in FIG. 14.

DETAILED DESCRIPTION OF THE INVENTION

FIG. 1 is described above in the Background of the Invention.

FIG. 2 illustrates consumer premises equipment 10 (also known orreferred to as “CPE,” “renewable energy consumer premises equipment” and“renewable energy equipment”) that resides on a residential building,but may alternatively reside on a business, institution or other realproperty. According to the embodiment of FIG. 2, CPE 10 incorporatesrenewable energy equipment that is used by the consumer for energygeneration. In this embodiment, CPE 10 includes solar components as therenewable energy equipment (source). Alternatively, any renewableequipment may be used such as wind, biomass or water (hydroelectric)energy generation equipment as well as non-renewable energy sources.Many terms used herein and the definitions for such terms are set forthin Appendix B.

The solar components described herein are collectively known asphotovoltaic (“PV” or “solar”) equipment (or system). In general, thereare two types of PV systems: systems that interact with the utilitypower grid with no battery backup capability and systems that interactwith the power grid and include battery backup. In addition, there areother systems that do not interact with the grid. In the embodimentshown in FIG. 2, the PV system (equipment) interacts with the power grid32 but does not include a battery backup. As a result, this systemoperates only when the utility is available. This PV system willtypically provide the greatest amount of savings to a consumer perdollar of investment. However, the system will shut down during anoutage, and will remain that way until utility power is restored. Notethat the consumer is a homeowner or resident for this discussion, butmay alternatively be a business, institution, entity or other user orpurchaser of power (electricity).

CPE 10 comprises several components including a PV (photovoltaic) array12 along with the appropriate mounting equipment. PV array 12 is made upof PV modules, which are an environmentally-sealed collections of PVcells. These cells convert the sunlight into electricity. One of themost common PV modules is 5-25 square feet in size. Usually four or moresmaller modules are framed together by struts called a panel. A panelspanning 20-35 square feet in area may be used for more easily handlingon a roof. CPE 10 includes mounting and wiring systems used to integratethe solar modules into the electrical systems of a residence oralternatively a business, institution or other consumer.

CPE 10 includes (as part of the wiring system) PV array circuit combiner14, ground fault protector 16, DC fused switch 18 and DC/AC inverter 20connected in series. PV array circuit combiner 14 is connected to PVarray 12. DC fused switch 18 is used as over-current protection for thesolar (PV) modules. Ground fault protection 16 is a circuit breaker.Combiner 14 is used since PV array 12 (modules) requires fusing for eachmodule source circuit. Some inverters alternatively include the fusingand combining function within the inverter housing. Inverter 20 isdesigned to take the DC power from PV array 12 and convert it intostandard AC power used by devices that consumes standard AC power.

CPE 10 further includes AC fused switch 22 and utility switch 24connected in series (and connected to DC/AC inverter 20). AC fusedswitch 22 is used as a disconnect (i.e., as an over-current protectivedevice (OCPD)). Utility switch 24 is used by the utility to switch offPV array 12. Most utilities require a visible-blade, lockable openswitch or disconnect in the inverter's output circuit. The utilityswitch 24 is usually located within sight of the service-entrance meterfor ease of locating by emergency response people. It should be notedthat CPE 10 may include additional components or fewer components thandescribed herein depending on power and installation requirements.

The components of CPE 10 are connected to original components includingmain service panel 26, consumer loads or usage (or consumption) 28,meter 30 and a local segment of the utility power grid 32. Specifically,utility switch 24 is fused and is connected to main service panel 26.The maintenance service panel 26 includes among other things theresidential circuit breakers. Main panel 26 is coupled to theresidential wiring and loads 28.

Meter 30 is coupled between power grid 32 and main service panel 26.Meter 30 is a device for measuring electricity consumption. In thisinstance, meter 30 is capable of net metering (or other alternativemetering schemes discussed below). This is shown in FIG. 2A. CPE 10 isshown interconnected to power grid 32 to enable the consumer to feed anysurplus or excess power (electricity) to grid 32. Meter 30 will spinforward when power (electricity) flows from power grid 32 into theresidence and backward when CPE 10 (solar components) produces surpluselectricity that is not immediately used. (For purposes of thisapplication, power consumed will have a negative value and powergenerated will have a positive value. This convention, however, may beswitched.) Excess power (electricity) is “loaded” on power grid 32.

Utilities may require an agreement for consumers to qualify fornet-metering. This is known as net metering to those skilled in thestate of the art. In alternative embodiments, there might be twoseparate meters as shown in FIG. 2B. Meter 36 is used as a measuringdevice for power consumed or used and meter 38 is used as a measuringdevice for power generated by the consumer's CPE. This “dual metering”convention may be desired by a consumer or required by a utility. Thisis because in some cases, the purchase price of power is different thanthe rate the utilities buy the power from the consumer.

The utilities may give credit or provide payment for excess electricitygenerated beyond power used by the consumer. In alternative embodiments,there may be two meters (as discussed above), one for forwardmeasurement and one showing backward measurement. In this illustrativeexample, the consumer uses 1,000 KHW in the given time period. Theconsumer's CPE generates 1,600 KHW in the given time period. The pricethe consumer pays is $0.14 per KHW. The buyback price is $0.12 per KHW.Using net metering the consumer will receive a credit of$0.12/KHW*(1,000-1,600)=$72. Using dual metering the consumer will pay$0.14/KHW*1,000-$0.12* 1,600=$52. In other cases, the results will bedifferent. The credit, payment or other quantifiable value for powergenerated by the CPE 10 is part of or known as “receivables” which willbe described in more detail below.

Additional details of installation including factors effecting mounting,positioning, output and other related information are found in manypower periodicals, papers and books including “A Guide to Photovoltaic(PV) System Design and Installation,” Edecon Engineering, Version 1,Jun. 14, 2001, the contents of this document being incorporated byreference herein.

The average cost for a solar system in the U.S. is approximately$30,000. Solar equipment cost may be calculated using commercialsoftware such as the assessment tool marketed by Fat SpanielTechnologies. (See http://www.fatspaniel.com/solutions-eu-assess.html.)In addition, there are other web based tools available for calculations.An example of this is found at http://www.findsolar.com. A professionalmay also be used to determine the size and costs of solar equipment andinstallation. See “A Guide to Photovoltaic (PV) System Design andInstallation,” Edecon Engineering, Version 1, Jun. 14, 2001 or otherarticles on this subject for more details. The solar components orequipment of CPE 10 that is subject to or may be borrowed against (maybe secured) includes PV array 12, circuit combiner 14, ground faultprotector 16, DC switch 18, DC/AC converter 20 and possibly othercomponents including the mounting equipment. Note that these componentsmay be considered fixtures depending on implementation and local laws.

FIG. 3 is a high level flow diagram of one method of financing CPE 10 inaccordance with an embodiment of the present invention. At step 50, alender receives a loan or finance request from a consumer (borrower) forthe financing of CPE 10. The consumer may submit an application for sucha loan much like a consumer does for other types of loans. However, suchinformation submitted will be abbreviated to reduce the administrativemortgage costs which make CPE harder to finance. (In certainembodiments, the general lending underwriting standards are modified andcosts associated with the same are reduced for the reasons discussedbelow). The financing application may be received in many ways includinga letter, website, email, phone and fax. As part of the financingapplication, the consumer may be required to submit limited financialand other information (e.g., name, social security or tax ID number,location of real property, authorization for credit information, type ofloan desired, etc.) for evaluation. CPE 10 (e.g., solar components)requirements and limitations will also be determined along with thecosts for such CPE 10.

Following step 50, several steps are executed in parallel, as shown, ormay be executed in any suitable manner. At step 52, the monetary valueof the estimated power generated by the CPE 10 over the life of the loanis determined. Details of step 52 are set forth in routine A shown inFIG. 4. Suffice it to say, the power estimated may be excess power asmeasured by a net meter 30 from FIG. 2A or gross power generated andmeasured directly off of the meter 38 shown in FIG. 2B. At step 54, theconsumer's ability to repay the loan is assessed. The consumer's creditinformation including FICO score are obtained. This credit informationwill be evaluated to assess whether the consumer will pay back the loanindependent of the value of any collateral or cash flows. In addition tothis assessment, the actual value for the CPE 10 may be determined. Therebates, credits, subsidies and any other benefits for the purchase ofCPE10 may be taken into consideration. In addition to step 54, theeffects of Federal, State and local laws as well as regulatory factorshave on expected loan amount, loan term, interest rate and other termsand condition may be determined at step 56.

Federal laws such as the U.S. Department and Urban Development (HUD)rules must be reviewed (particularly if the loan is used to purchasereal property). For example, HUD rules require a cool-down period inwhich the consumer/borrower may terminate the agreement without penalty.State laws must also be reviewed. For example, State usury laws must bereviewed to determine the specific rules and restrictions on loans andinterest rates. For example, California's usury and other laws regulatethe loan of money and the interest rates employed. See Title IV-Loan,Ch. 3, Loan of Money, California Civil Code Section 1912-1916 and theCalifornia Finance Lenders Law of the California Financial Code. Inaddition, Federal, State and local anti-predatory lending laws that alsoprotect the consumer/borrower for fraudulent, deceptive, discriminatoryor unfavorable practices must be reviewed. The lender must also adhereto licensing laws for lending money to consumers.

Once steps 52-56 are completed, a loan or financing amount to be offeredto the consumer is determined (calculated) along with the relevantinterest rate, loan term and other conditions at step 58. The amount,interest rate and other terms and conditions take into account marketinterest rates and conditions, as described in detail with respect toroutine B in FIG. 5. In addition, other factors relating to the CPE 10are considered as described in detail with respect to routine C in FIG.6. Any down payment by the consumer will also be taken intoconsideration.

As part of this determination, applicant information is verified. As forthe loan, the terms may be for a fixed monthly term or a variable termbased on a payment amount the consumer prefers (and is supported bytheir credit information). Other terms and rates may be used includingfixed or variable interest rates based on market conditions for a givencredit information. Down payments may or may not be required based onthe credit information and other factors. The loan application processmay be done entirely through the web in real or near-real time.Execution then moves to step 60 wherein the lender approves the loan andoffers the loan to the consumer at the terms determined (from steps52-58). The consumer may be notified of such approval in many waysincluding a letter, email message, via website, print out or otherefficient means. At this point, the consumer has the option to eitheraccept or reject the loan at the given terms (steps 61 and 62). If theconsumer rejects the loan, the process may return to step 58 wherein theloan terms are recalculated (if the lender desires). Assuming theconsumer accepts the loan at the terms offered at step 62, suchacceptance shall be by execution which may include notarization.Execution may be in written or electronic/digital form.

Now, the lender wants to increase its chances that it will be repaid thefull amount of the loan. To this end, the lender will secure the loan orfinancing at step 64 as described in routine D in detail (FIG. 7). Inbrief, the lender may secure the loan against a power proxy, the CPE,rebates, credits and/or subsidies, a power purchase agreement, realproperty, and/or a conditional sales contract (or power contract).Additionally or alternatively, the lender may take or receive anassignment from the consumer for the receivables (as described below) itreceives for future power generated by CPE 10 (excess or direct poweroff of the CPE). This is accomplished at step 66. Alternatively or inaddition, the lender may take an assignment in the other power proxyelements (besides the receivables as discussed below), power attributesand/or CPE attributes (discussed below), a power purchase agreement,power contract and/or a conditional sales contract.

Note that the method of FIG. 3 was described in terms of a loan forpurchase. However, the present invention contemplates a variety offinancing techniques for a variety of activities including purchase,lease, installation and maintenance of the CPE 10.

With respect to the “receivables” described above, many utilities arerequired to either credit a consumer's account (back meter) or pay aconsumer for electricity generated by CPE 10 and delivered onto thepower grid. 32. This payment may be in the form of a certificate,credit, money or other quantifiable value. For example, New Jerseyoffers SRECs for every 1,000 KWH of electricity. In March 2006, thecumulative weighted average price ($/MWH) for an SREC was $201.98 on theopen market. See http://www.njcep.com/srec/trading-statistics.html.Therefore, the receivables include any valuable payment, instrument orother valuable consideration for the power generated by CPE 10. Thereceivables may be provided by a utility or other entity for power(electricity) generated by CPE 10 (and delivered onto a power grid 32).

Referring to FIG. 4, the value of power (excess or direct gross power ofthe CPE 10) generated at step 52 of FIG. 3 is broken down in detail inroutine A. As will be appreciated, the method (steps) of FIG. 4 is onlyone suitable embodiment for accomplishing the estimation of step 52. Atstep 52 a, power generated by CPE 10 is estimated (estimated powergenerated is referred to as “EPG”). Step 58 a may be accomplishedthrough any suitable process such as by the steps in routine E shown inFIG. 10.

Turning to FIG. 10, seasonal factors affecting CPE 10 power generationare determined at step 58 a 1. In brief, the seasonal strength ofsunlight and length of sunlight hours affect estimated power generationby CPE 10. These factors vary throughout the year (by season). Estimatedpower generation typically peaks during the summer and dips lowestduring the winter. In some cases, this graphical function may beinverted (colder weather sometimes increases the power generation.).However, power generation depends on the angle (orientation discussedbelow) of the solar equipment (panels) as well as the weather conditionsat the particular location.

Continuing with FIG. 10, Execution moves to step 52 a 2 wherein the CPE10 location based factors affecting seasonal power generation aredetermined. The longitude and latitude placement of the CPE structureare factors that will be considered (or alternatively the zip code thatcan be translated into longitude and latitude). At step 52 a 3, the CPE10 location based factors are used to determine weather based factorsthat affect power generation. That is, the specific placement of the CPEwill affect power generation. For example, the CPE may generate greaterpower in the winter than in the summer depending on the particularplacement (attachment) of the CPE 10.

With further reference to FIG. 10, at step 52 a 4, the degradation ofpower (based on the components of CPE 10) is determined. In other words,the efficiency of CPE 10 over the life of the CPE 10 is determined.Typically, efficiency decreases over the economic lifetime of the CPE10. Many solar systems are warranted by their manufacture at their ratedgeneration capability for 10-20 years (factory guaranteed outputrating). With some CPE, the initial efficiency may be located above themanufacturer's rated capacity (100%). Average efficiency for CPE 10 willlikely decrease linearly over time. There are also industry standardsfor degradation that may be considered in place of the manufacture'swarranty. Also note that different system components may have differentdegradation rates and lives. These factors are also considered.Following step 52 a 4, other factors affecting power generation aredetermined at step 52 a 5. Such factors include panel type and thedirectional orientation of the CPE 10 (including degree of roof slope).The directional orientation includes the angle measure with respect tohorizontal, vertical, or other reference plane such as ground or thesurface on which the CPE is positioned. These factors also includesunlight concentration striking the CPE (due to water reflection,presence of concentrators or concentrating photovoltaics and/or coatingsfor example), sunlight blockage (e.g., a bush, tree, building, presenceof residue of films of materials deposited from the air or from waterand/or other element obstructing light from striking the CPE 10),expected sunlight at the CPE 10 over a given period of time and/orgeneration capacity of the CPE 10. There are other considerationsaffecting power generation including temperature limits of the solarmodules, dirt, dust and plant material accumulation, mismatch and wiringlosses, and DC to AC conversion losses.

If the factors in 52 a 1-5 are taken into consideration, estimated powergeneration can be determined accurate enough for lending purposes. See“A Guide to Photovoltaic (PV) System Design and Installation,” EdeconEngineering, Version 1, Jun. 14, 2001 for additional factors and theireffect on CPE generation. Of course, those skilled in the art willrecognize that certain of these steps may not be included in theprocess, and/or may be performed optionally on a case by case basis.

Returning to FIG. 4, following step 52 a, the market buy back price(sold back to the power grid) for estimated power generated (EPG) isestimated at step 58 b. In general, the buy back price will vary withthe region, utility and market trading for power. In one example, marketprice may be maintained at a relatively high value for a given period oftime and decreases to a low value. The price mildly increases followingthat decrease. In another example, market price may appear as a linearfunction over time wherein the market price steadily increases overtime. See futures markets for power and discussion below. In sum, thebuy back price may vary over time. The buy back price may be based oncurrent market prices, scheduled PUC prices, future estimate marketprices, wholesale prices, the amount of the power generated, timing ofthe power generated, and/or location of power generated.

Then, at step 52 c, the monetary estimated value of the EPG by CPE 10 iscalculated over the life of the loan by multiplying the EPG by marketbuy back price. This calculation may be performed using an equation suchas (or alternatively another similar equation):

$ EPG  value = ∫₀^(t)EPG_(t) × PG_(t)

where “EPG” is the estimated power generated at a specified “t” time and“PG” is the buyback price of the power ($KWH) at a given time “t”.Following this calculation, execution moves to step 52 d whereinestimated power consumption (EPC) is determined. EPC varies constantlybecause demands vary constantly due to changing consumer usage. Currentusage (or consumption) is affected by the number and type of devicesused by the consumer. For purposes of calculation, estimated consumptionmay be a fixed average value or varying values based on historicalusage, cost of living, by location or other factors.

At step 52 e, the market price (purchase from power grid) of powerconsumed is estimated. The market price of power will also vary and willdepend on the geographical region, the entity selling the power, thearrangement (non-interruptible or interruptible contract) and time ofday of use. Any given utility for example may set prices differently perseason. In one example, the utility price for usage may remain constantover a period of time. Alternatively, the price may change based on atiered (i.e., stepping) scheme over a given time period for a specificutility. California is an example of a State in which such a pricingscheme is used. In particular, usage price steps up incrementally aftera certain amount of usage (over time).

In yet another example, utility price (daily) point maybe lower duringoff-peak periods. However, the price jumps to a higher level during peakperiods of usage. Note that there might be more than one peak ornon-peak rate. In yet another example, a different pricing scheme existsfor consumers under “non-interruptible” and “interruptible” arrangementswith a utility. In particular, the price per KWH is higher (for somereal market prices) for consumers that do not accept interruptions inusage during peak usage periods. Alternatively, consumers that acceptinterruptions in power (due to peak usage, transmission congestion orother factors), the utility prices are substantially lower.

Rates are typically determined by the applicable regulatory agencies(PUCs) over a large period of time (e.g., 10 year or 20 years). Thepricing component or gradient may be based on the consumer price index(CPI) for energy or may be derived from the futures commodity market forelectricity proxies such Dow Jones electricity indexes(http://www.diindexes.com/mdsidx/?event=energyUSDaily) or natural gasfutures market or other. In addition, any length of time may be usedthat is sufficient to enable the lender to determine long range pricing.(Price for power has historically increased 2-6% per year.) It isimportant for the lender to consider long-term pricing of power. Whilepricing is normally set by the PUCs, they will tend to mirror theprojected long-term futures market for energy. Such information willhelp determine whether the customer can afford the repayments over thelength of the loan. That is, the lender will determine whether therewill actually be cash flow back to the lender over the long-term.

In sum, the consumer pricing scheme may be based on scheduled PUCprices, current market prices, future estimated market price, thepresence or an absence of an interruption contract, the amount of powerused, location of power used and/or the timing of the power used.

At step 52 f, estimated monetary value of consumption (EPC) iscalculated over the life of the loan. This calculation may beaccomplished using the equation (or alternatively a similar equation):

$ EPC  value = ∫₀^(t)EPC_(t) × PC_(t)

where “EPC” is the estimated power consumption in dollars at a giventime “t” and PC is the purchase price of power (from the utility orother entity that sells power) at a given time “t.”

Now, once the monetary values for EPG and EPC are calculated, theestimated net monetary value of power is calculated at step 52 g in FIG.4. This calculation is accomplished by the equation:

EPG−EPC=Net value for excess power.

This value will be used to determine the financing or loan amountawarded and other financing or loan terms.

As described above, the loan amount awarded, interest rate, etc. aredetermined at step 58. As part of that determination, the routine Bshown in FIG. 5 is performed to accomplish this task (along withinformation of steps 52-56). In particular, the lender shall continuallyreview current market rates at step 58 a to determine the rate at whichthe lender may borrow money. Such information will be obtained from adatabase of current market rates. The rate at which the lender mayborrow will ultimately allow the lender to determine the rate at whichthe lender may then lend money to a consumer. At step 58 b, the lenderwill determine the proper interest rate for the loan provided to theconsumer based on the market interest rates for obtaining the money toloan the consumer.

Reference is now made to FIG. 6 wherein routine C is executed (as partof step 58). That is, the loan value (and terms) will take into anaccount any legal and other costs associated with collection should theconsumer/borrower default on the financing or loan. These legal andother costs may include seizure costs and professional CPE servicecosts. In particular, at step 58 c, the gross salvage or liquidationvalue of CPE 10 will be estimated and factored into the loandetermination at step 58 c. At step 58 d 1, the net salvage value of theCPE 10 is determined. As part of this step 58 d, legal costs associatedwith the collected property will be subtracted from the gross salvagevalue. In addition, remarketing costs for CPE 10 resale will besubtracted from the gross salvage value of the CPE at substep 58 d 2.These costs are factored into the loan equation at step 58. In additionto these factors, there are costs for servicing the loan over the lifethereof and other administrative overhead costs for processing the loan.These factors are determined at steps 58 e and 58 f.

At the same time as the steps of routines B and C are performed, or anyother suitable time, to ultimately make a determination about loanterms, the consumer's application information shall be reviewed forfraud. In addition, the effective monetary value of CPE 10 is estimated.Rebates, credits, other subsidies and labor costs are determined andsubtracted from the gross value of the CPE 10. The gross costs of theCPE 10 are typically provided by a solar installationprofessional/contractor or may be obtained from a database from invoiceinformation. The estimate provided by the professional will likelyinclude actual costs for the equipment and the professional costs forinstallation. Rebates are based on the state in which the CPE will bepositioned.

Returning to FIG. 3, once step 58 is executed wherein the loan awardamount is determined along with the terms thereof, the consumer'sapplication is approved and the loan is offered to the consumer at step60. Execution then moves to step 62 wherein the consumer accepts theloan. Now, once the loan package (defined) is determined, offered andaccepted by the consumer (steps 58, 60, 62), a financial instrumentshall be created supporting the loan or financing for the CPE 10. In aneffort to increase the likelihood that the loan will be repaid, as partof the terms of the loan, the lender has the option to (1) secure theloan against personal and/or real property, at step 64 (routine D shownin FIG. 7) and/or (2) receive an assignment of the receivables at step66 (alternatively or in addition take or receive an assignment in theother power proxy elements (besides the receivables), CPE attributes, apower purchase agreement, power contract and/or a conditional salescontract (all discussed below)). If the lender decides to secure theloan against personal and/or real property, a security interest(s) asdiscussed below shall be created as part of the financial instrument. Ifthe lender chooses to receive an assignment of the receivables(unsecured loan), the lender will require that the consumer/borrowerexecute an agreement which, among other things, assigns the rights inthe receivables to guarantee the loan. The same holds true for anyassignment in other power proxy elements, power attributes, CPEattributes, a power purchase agreement, power contract and/or aconditional sales contract (all discussed below).

If the lender chooses to secure the loan against the personal propertyand/or real property as discussed below, the lender may follow the stepsset forth in routine D in FIG. 7. In particular, at step 64 a, thelender will take a security interest in the power proxy 80 as detailedin FIG. 8. Details of securing the power proxy are described withreference to routine F in FIG. 11. In addition to the security interestin the power proxy 80, the lender may take a security interest in theCPE 10 at step 64 b (raw equipment as opposed to the attributes of theCPE 10 as described below) as well as in the real property on which CPE10 is expected to be disposed at step 64 c. Details of securing the CPE10 and real property are described in routines G and H, respectively, inFIG. 11.

In addition or alternative to the security interests discussed thus far,the lender may take a security interest in the rebates, credits and anysubsidies associated with the purchase of the CPE 10 and any powerpurchase agreement at steps 64 d and 64 e, respectively. The steps forsecuring the property in these steps are defined in routines I and J,respectively in FIG. 11. Lastly, the lender will likely take a securityinterest in the attributes associated with the CPE 10 at step 64 f asdefined in routine K in FIG. 11. The lender may secure the loan for theCPE 10 by taking a security interest in one or more of the power proxy(elements in FIG. 8), CPE, real property, rebates, credits andsubsidies, power purchase agreement, and CPE attributes as set forth insteps 64 a-f.

As stated above, the security interests discussed above (one or more)will be created as part of the financial instrument between the lenderand the borrower/consumer. The financial instrument may include one notesupporting the entire balance or a portion of the loan (financing) forthe CPE 10. Alternatively, the financial instrument may include aplurality of notes supporting a plurality of amounts of the loan(financing) for CPE 10 wherein the sum of the amounts equals the balanceof the loan or alternatively is less than the balance of the loan. Inthe embodiment in which a plurality of notes are used, such plurality ofnotes may be cross-collateralized whereby a default by a consumer on oneor more notes (of the plurality of notes) triggers a default by theconsumer on any or all of the remaining notes. Alternatively, theplurality of notes may not be cross-collateralized whereby a default bythe consumer on one note will not trigger a default by the consumer onthe remaining notes (of the plurality of note under the financialinstrument).

Reference is now made to FIG. 8 wherein examples of the power proxy 80are shown. In particular, power proxy 80 includes receivables 82, power84 and housing 86. Receivables 82 may be cash flows 82 a, certificates82 b, and/or credits or other valuable consideration 82 c for the powergenerated by the CPE 10. The receivables 82 may be provided by a utilityor other entity that pays or reimburses a consumer for power generatedby the CPE 10. Power 84 may be defined as power attributes 84 a as setforth in FIG. 9 or naked power 84 b. Power attributes 84 a as defined inAppendix B are the characteristics of power that are transferableseparate and apart from the actual naked power itself. Naked power ismerely the electrons themselves. Housing 86 is used to segregate power(naked power) generated by the CPE 10 from power generated elsewhere(e.g., other consumer power or utility power). The housing 86 may beidentified by warehouse receipts, bill of ladings, and/or otherdocuments evidencing title to housing 86 including, without limitation,warranty registration and affixed serial numbers. Note that a securityinterest in the housing is also known as an administrative securityinterest.

Power proxy 80 also includes regulatory rights 88 in the power generatedby the CPE 10. For example, a regulatory entity such as a State PUC withcontrol over a utility can change the amount billed to the consumer.These charges are similar to those third party charges that can be addedto phone bills. The penalty for default would be loss of service and/orcollection efforts. Such regulatory rights 88 are created by debiting aconsumer's bill for power generated by the CPE 10 or alternatively byupdating a consumer record. Power proxy 80 further includes rights inintervention 90 of the CPE 10. That is, intervention rights is theability (i.e., right) to interfere with the consumer's ability to usethe CPE 10 to generate power. Such intervention may be by sending aperson out to intervene or using a device (local or remote) tointervene.

Reference is now made to FIG. 9 wherein power attributes 84 a and CPEattributes 100 are shown. The attributes (power and CPE) shown in FIG. 9may be associated with either power and/or the CPE 10 (i.e.,indistinguishable from power or the CPE 10). Therefore, the attributesare shown in the same figure (FIG. 9) as associated with both power 84and the CPE 10. Power attributes 84 a and/or CPE attributes 100 includeemission reduction credits (ERC) 102. ERCs 102 (certificates) are assetsthat can be used by its owner or sold to entities that need emission(e.g., ROC, NOx, PM (including PM₁₀), CO or Sox) offsets. An emissionoffset occurs when an entity compensates for an increase in emissions inone area by decreasing emissions in another area. ERCs 102 are onlyissued for reductions of actual emissions that are quantifiable,enforceable, permanent and surplus. Typically, there is no minimum ormaximum limit on the amount of reductions that may be eligible for ERC(certificates). Once the ERC (certificate) is redeemed, the ERC isretired, and cannot be used again. State or county entities ultimatelydetermine the rules by which ERCs 102 are issued and redeemed. Sufficeit to say, the ERC system is both good for business and good for theair. ERCs 102 also means earning goodwill in the community.

Power attributes 84 a and/or CPE attributes 100 may also includetradable renewable credits (TRCs) 104. TRCs 104 shall mean any and allawards, credits and/or other consideration representing the value forthe attributes associated with power generated by a renewable energy(“green”) source. These attributes can be unbundled (i.e., separated)from the underlying power itself (naked power) and sold independently asone or more discrete, tradable instruments to entities that value“greenness.”

In detail, TRCs (green tags) are a market mechanism that represent theenvironmental benefits associated with generating power (electricity)from renewable energy sources. Rather than functioning as a tax onpollution-causing electricity generators, as traditional carbonemissions trading programs do, TRCs function as a non-governmentalsubsidy on pollution-free electricity generators. In states which have aTRC program, a TRC energy provider (such as a wind farm or a consumerwith CPE) is credited with one TRC for every 1000 kWh of electricity itproduces. A certifying agency gives each TRC a unique identificationnumber to make sure it doesn't get double-counted. The TRC or greenenergy is fed into the electrical grid (by mandate), and then theaccompanying TRC can be sold on the open market.

Power attributes 84 a and/or CPE attributes 100 also include independentpower production (IPP) credits 106 and grid congestion credits 108. IPPcredits 106 shall mean the value in aggregating individual consumerpower generation and selling aggregated power for more than the value ofselling the components as un-aggregated power. In other words, IPPcredits 106 may be aggregated or accumulated to attain the status of anIPP which afford that entity the opportunity to sell power at greatervalue than the value an entity may receive individually, for example,for selling power generated by CPE (e.g, below wholesale rates).

Grid congestion credits 108 are a mechanism that represents certainbenefits associated with generating electricity from renewable energysources and with relieving demand on the local power grid. Gridcongestion continues to be a problem as the demand for power increases.Grid congestion credits 108 function as a credit or subsidy for areprieve on local grid congestion.

Power attributes 84 a and/or CPE attributes 100 may also include royaltycredits 110. Royalty credits 110 means the cash flow associated withroyalty interests. Royalty interests are payments made for the use ofproperty such as the CPE 10. The payment amount is usually a percentageof revenues obtained through the use of the property. Royalty credits110 may also include an option to purchase some or all of the CPE, adivided or undivided interest in the CPE, a right to receive a certainamount of the output power from the CPE and/or royalty interest in theCPE (as indicated earlier). Power attributes 84 a and/or CPE attributes100 also includes green tag credits 112. Green tag credits 112 are thesame as tradable renewable credits 104. Power attributes 84 a and/or CPEattributes 100 may also include power production credits 114 (also knownas power purchase agreement or credits). Power production credits accruewhen power purchase agreements are accumulated.

The power attributes 84 a and/or CPE attributes 100 are credits that mayinclude (identified by or associated with) federal tax credits, statetax credits, utility credits, third party credits, subsidies and/orrebates.

It should be note that a lender or consumer may sell the attributes(power attributes and/or CPE attributes) under different circumstancesto reduce the amount financed.

In order to secure the loan as set forth in step 64 in FIG. 3, thelender may take security interests as set forth in routine D of FIG. 7.

Reference is now made to FIG. 11 wherein routines (F-K) for takingsecurity interests in routine D (FIG. 7) are described in detail. Inparticular, the lender shall take a security interest in the power proxy80 (i.e., power proxy security interest). There are two steps in routineF to accomplish this. First, the lender must attach the securityinterest to the collateral (power proxy elements in FIG. 8) at step 64 a1. In other words, the security interest must be created by a financialinstrument or other legal agreement document.

To create financial instrument or other legal agreement, the lender mayrequire the consumer/borrower to execute such a financial instrument(UCC1 statement for personal property). The financial instrument willdescribe the collateral. In this case, the collateral includes one ormore power proxy 80 elements shown in FIG. 8 (receivables 82, power 84,housing 86, regulatory rights in power generated by the CPE 88 and therights in intervention 90). In short, the financial instrument gives thelender the authority to foreclose or make a claim to the collateral. Thefinancial instrument will also include other terms including paymentterms, what constitutes a default, the rights of the lender/creditorupon default, maintenance of the solar equipment, insurance for theequipment and possibly other terms, including but not limited to theright to assign the financial instrument by the lender.

Second, the lender must perfect the security interest to ensure that thelender has priority over other creditors of the collateral. This isaccomplished at step 64 a 2. There may be different methods forperfecting different power proxy elements shown in FIG. 8. The categoryor characterization of the elements (e.g., “receivables”) willultimately dictate the method of perfection (in accordance with Statelaw). One common method used for perfection of the power proxy securityinterest (if such elements are characterized as personal property understate law) is filing a financing statement (UCC1 filing for personalproperty). In short, the statement shall include the name of theconsumer (borrower/debtor), the name of the secured party/lender and theproperty covered by the statement. There are, however, exceptions tofiling. Possession of the collateral is one of them. For purpose of asecurity interest in “receivables” (e.g., cash flow security interest),the filing method for perfection would apply because “receivables” arelikely characterized as personal property under relevant State law(UCC). On the other hand, “regulatory rights in the power generated bythe CPE” may likely be characterized differently (see below forexample).

In the event a filing is required, the lender shall follow the laws ofthe State to determine the proper office for filing. The most commonoffice to file is the Secretary of State. In other situations, therecording office for filing is the county in which either the collateralor debtor is located. The location for filing varies by State and thetype of collateral. For example, in California, the proper location forfiling is the Secretary of State unless the security is a motor vehiclefor which the proper location is the Department of Motor Vehicle. InVirginia, the proper location for filing is Virginia State CorporationCommission office of the Clerk. In Maryland, the proper location forfiling is the Maryland Department of Assessments and Taxation. Article 9of the UCC dictates the rules and requirements for taking securityinterests in personal property. All States have adopted Article 9 of theUniform Commercial Code (UCC), but some have exceptions (e.g., filing).(Chattel mortgages may alternatively be used as a vehicle for securityinterests described herein if permitted by an individual State.).

An example of attachment and perfection is now described with respect tothe regulatory rights in the power generated by the CPE (element ofpower proxy). In particular, attachment may take the form of a bill orinvoice with the added charges representing the loan payments.Perfection in this case would be the possession of a copy of the bill orinvoice which listed additional charges. The charges will be added tothe balance or charged against any credit on the invoice. A copy of thebill with the additional charges in the possession of the lender shallgive the lender superior rights over the consumer's payments againstthird parties.

Another example of attachment and perfection is described for a securityinterest in the housing 86 segregating power generated by the CPE frompower generated elsewhere. Creating the security interest in the housingmay include identifying the housing in the financial instrument by awarehouse receipt(s), bill of lading or other document evidencing titleof the housing. Perfection may include possession of the warehousereceipts, bill of lading or other document evidencing title.

In addition to the security interest in the power proxy 80, under theterms of the arrangement with the consumer, the lender shall also take asecurity interest in CPE 10 (CPE security interest) as set forth in step64 b. To this end, a CPE security interest will be created by thefinancial instrument. In reality, the lender will do this because thelender wishes to ensure that (1) the CPE (as an asset) continues togenerate power in order to garnish the benefits from the CPE and (2) thelender will be repaid upon the sale of the property in the event theconsumer/borrower defaults. The security interest documents such as thefinancial instrument may permit the lender to place additionalrestrictions on the use, maintenance and insurance as well asrestriction on the removal or sale of the CPE.

As for the process, the same UCC requirements equally apply to the CPE(provided that the CPE constitutes personal property as opposed to realproperty). CPE security interest must be attached (created) andperfected as set forth in steps 64 b 1 and 64 b 2 of routine G in FIG.11. Under the terms of the arrangement (financial instrument), thelender will be also be authorized to foreclose or make a claim to thecollateral (CPE) described in the financial instrument. Similar to thepower proxy security interest, the agreement will also include paymentterms, default terms, lender/creditor terms upon default, CPEmaintenance terms and insurance requirements. The agreement is likely tobe State specific and take into consideration such elements as “oneright of action” rules.

In addition to attachment, the lender must perfect the CPE securityinterest to ensure that the lender has priority over other creditors ofthe collateral. This is accomplished at step 64 b 2. Perfection willlikely be accomplished by filing a UCC1 statement (UCC1 filing forpersonal property). In short, the statement shall include the name ofthe borrower/debtor, the name of the secured party/lender and theproperty covered by the statement. In this case, the property is CPE. Inthe event a filing is required under applicable State law, the lendershall follow the State laws to determine the proper office for filing.As indicated above, the most common office to file is the Secretary ofState. In other situations, the recording office for filing is thecounty in which either the collateral or debtor is located. The locationfor filing varies by State and the type of collateral.

Note that for security interests in personal property, the UCC filing istypically active for a period of five years unless continued for anadditional five years at a time. The UCC filing will lapse at theexpiration of the five-year period unless a continuation statement isfiled, typically within six months prior to the date of lapse.

In addition to the security interests in the power proxy (e.g.,receivables/power and CPE), the lender may secure the loan against thereal property/estate on which the CPE will be attached. Much like theterms for the CPE, a security interest in the subject real property(real property security interest) will be attached and perfected (steps64 c 1 and 64 c 2 of routine H in FIG. 11). The conventional realproperty/estate documents will be signed to attach (create) the interestto the real property. Such documents typically include the mortgagepapers. Real property/estate papers (financial instrument) are typicallyseparate from the documents (financial instrument) relating to the powerproxy security interest and CPE security interest. However, all securityinterest documents may be evidenced by one universal financialinstrument (provided such instrument abides by State law.)

If required, a deed will transfer to the lender or trustee and then berecorded along with the mortgage documents in the appropriate office forperfection. The real property documents are typically recorded in thecounty or local office in which the real property is located. The CPEwill also be subject to and recorded as part of real property/estate.Once filing is performed, the transaction is secured against thirdparties. There is no need for further action on the part of the lenderunless there is a default. The recorded documents remain of record untilthe lender is repaid the full amount of the loan. At this time, themortgage documents will be returned to the consumer/borrower.

In the event a consumer has a conditional sales contract for the realproperty, the lender may take a security interest in the conditionalsales contract (attachment and perfection).

Note that one real value to the consumer in securing the loan againstthe real property is the tax benefit. The consumer/borrower shouldreceive tax deductibility treatment from the IRS and/or other taxingbodies for the interest on real property mortgage. As an alternative toa mortgage, a deed of trust may be used to secure the payment of theloan.

In accordance with the invention, the lender has now attached andperfected (i.e., filing) the CPE as personal property as well as part ofthe real property. There is a real advantage in following this process.The dual filings ensure that the public is placed on notice of therights in the CPE against any third party interests. Since under Statelaw there may exist some uncertainty whether CPE constitutes personal orreal property, in accordance with the invention, the lender shall nowrecord the CPE as personal property in the appropriate office of theSecretary of State (for example) and will record the CPE along with thereal property in the appropriate county office. In this respect, thelender's interest in the CPE against any third party interests as wellas bankruptcy or insolvency proceedings has been adequately protected.With respect to any type of property secured (described above), securityinterest documents may require a notary for creation of such documents.

In addition to the power proxy, CPE and real property securityinterests, the lender may secure the loan by taking a security interestin the rebates, credits and subsidies offered by the Federal, State andpossibly local governmental entities for the CPE 10 at step 64 d(California Solar tax credits are one type of rebate/subsidy). Steps 64d 1 and 64 d 2 of routine I (FIG. 11) describe attachment and perfectionof such rebates, credits and subsidies. The interest will be created bya financial instrument (agreement) which will describe the collateral(rebates, credits and subsidies) and authorized foreclosure or make aclaim to the collateral. The financial instrument (agreement) will alsoinclude payment terms, default terms, lender/creditor terms upondefault, CPE maintenance terms and insurance requirements. The financialinstrument (agreement) is likely to be State specific and take intoconsideration such elements as “one right of action” rules.

In addition to attachment, the lender must perfect the security interestin the rebates, credits and subsidies to ensure that the lender haspriority over other creditors of the collateral. Perfection will likelybe accomplished by filing a financing statement (UCC1 filing forpersonal property) in the appropriate place or office dictated by Statelaw. In short, the statement shall include the name of theborrower/debtor, the name of the secured party/lender and the propertycovered by the statement. State law will dictate the characterization ofthe subject property and the rules and requirements for attachment andperfection.

In addition the security interests described, the lender may take asecurity interest in a power purchase agreement (the actual agreementbetween the consumer and power provider to reimburse, credit orotherwise pay a consumer for power generated by the CPE). The securityinterest may be created by a financial instrument (alone or with othersecurity interests described herein). Attachment and perfection areaccomplished in steps such as steps 64 e 1 and 64 e 2 of routine K,respectively in FIG. 11. State law will dictate the characterization ofthe subject property (i.e., power purchase agreement) rules andrequirements for attachment and perfection. The lender may also take asecurity interest in any power contract between resident consumer and autility.

In addition to the security interests above, the lender will likelysecure the loan against the CPE attributes (similar to power attributesunder power proxy shown in FIG. 8). Attachment and perfection are setforth in steps 64 f 1 and 64 f 2, respectively. In particular, thesecurity interest in CPE attributes will be created by a financialinstrument and the security interest shall be perfected in accordancewith State law. For the CPE attributes (like power attributes), suchproperty may likely fall into the category of personal property and beperfected in accordance with the UCC (e.g., UCC1 filing).

In addition to the security interests above, the lender may take asecurity interest in (1) any assignment discussed above, including forexample, the receivables or other power proxy elements and/or (2) anylong term lease of the CPE and/or real property on which the CPE isdisposed, and/or any chattel mortgage for the CPE. Attachment andperfection shall abide by State law for personal and real property.

In accordance with the present invention, the method for financingdiscussed above and the creation of these financial instruments mayestablish a market for creating and trading of such financialinstruments. This market may include CPE installers which marketservices by introducing consumers to financing options through theplurality of financial instruments and brokers who facilitate theformation of the plurality of financial instruments.

Once all desired security interests are attached and perfected,execution of the method in FIG. 3 is complete. At this point, the lendermay execute a check and forward it directly to the installer or othersuch suitable party. The check may be made for the entire amount orpayment may be made incrementally. A first incremental payment may bemade, for example, as a deposit for the materials. Another example maybe an order or delivery of the materials/components that triggers afirst incremental payment. Subsequent incremental payments could be madeupon passing an inspection of the installation (at job site by anyentity including a government entity, a private provider of traditionalgovernmental service including power, sewage entities, or the consumereven). Under another financing scheme/model, payment alternatively couldbe made to a distributor, a dealer or a manufacturer of the componentsof the CPE. Payments to these entities in an incremental scheme willhelp reduce fraud and will also ensure that the money is actually usedto purchase and install the CPE in accordance with the requirements setforth in the financing application process.

When the consumer/borrower defaults on his/her obligations to repay theloan, the lender as a secured party has the rights and remedies providedin the security agreement, provided by the State UCC and other laws aswell as provided in the mortgage documents. In general, the lender mayreduce his/her claim to judgment, foreclose or otherwise enforce thesecurity interest(s) by any available judicial procedure. The rights andremedies may be cumulative. In the embodiment of the present invention,the lender, in case of a default, will focus attention on the securedcollateral. In this case, the collateral is the one or more power proxy80 elements (FIG. 8), the CPE 10, and the underlying real property onwhich the CPE is attached, rebates, credits and subsidies, powerpurchase agreement, CPE attributes (like power attributes as part ofpower proxy) and/or any other property secured. However, the realproperty is not required for collection. The lender has other vehiclesto ensure loan repayment including, for example, the power proxyincluding the receivables, power and the CPE itself. Therefore, theprocess for foreclosure is greatly simplified. With a simpler, lesscostly foreclosure procedure the risk premium associated with theseloans is minimized. The reduced process is discussed below in moredetail.

Now, a loan for the purchase of CPE may be repaid using severaldifferent methods under the terms of an agreement with theconsumer/borrower. Under a traditional loan terms, the consumer repaysincrementally during the life of a loan much like any loan (e.g.,mortgage). The payments are typically made in monthly increments.Payments may be initially applied toward interest with the remainingmonies applied toward the principal of the loan if the loan is fully orpartially amortized. The consumer may make prepayments to the lender tobe applied toward the principal with and without penalties. While thistraditional payment method has been adequate, there exists an improvedrepayment method that would increase the likelihood that the lender'sloan will be repaid and/or increase the lender's profits and/or reducethe cost of the loan to the consumer/borrower.

By following the steps of the method set forth in FIG. 3 (including theroutines in later Figs.) in accordance with an embodiment of the presentinvention), the entire lending underwriting standards (and process forsuch standards) have been simplified (modified) and the costs have beenreduced for the consumer. The process is now more streamlined (reduced)than the typical process for obtaining a traditional mortgage for thesubject real property. In the traditional process, the lender willundertake an appraisal evaluation, a title search and otheradministrative functions.

In accordance with an embodiment of the invention, limited/abbreviatedor no appraisals, property inspections or title searches will beconducted. There is no need for these functions when the lender takesinto consideration other factors to repay the loan such as thereceivables, rebates, credits, and subsidies, value of the CPE itself(for example). Such factors considered are used to modify, for example,the income-to-debt ratio and the debt service coverage of the lendingunderwriting criteria. In addition, such factors may be taken intoconsideration to show an increase in appraisal value of the realproperty (if an appraisal is actually performed). In other words,sufficient security exists in the personal property and other non-realproperty being secured (e.g., receivables in the power proxy, CPE, CPEattributes, the rebates and credits, etc.) as well as through use ofcredit information and any fraud verification.

Because there is no need for such evaluations, title searches and otheradministrative functions, the lending process is simplified and thecosts relating to financing are reduced. Escrow requirements have alsochanged in view of the considerations above (security interestsdiscussed as an example). In sum, the mechanisms used for underwritingenabling and escrow enabling take into consideration many factors(described above) to modify the lending underwriting standards as wellas the fees associated therewith.

Another aspect of the invention is now described. In this aspect, thelender shall receive payments directly from a utility for the power(excess or directly off of the CPE) generated by the CPE and deliveredonto the power grid. In such an arrangement, the utility shall purchasethe power and distribute payments (process receivables) to the lenderdirectly. The payments processed shall correspond to power measured atset increments. The consumer/borrower will continue to pay the utilityfor power (electricity) consumed. FIG. 12 illustrates an implementationof this method in accordance with an embodiment of the invention. It isassumed that the consumer has applied for a loan, and the lender hascompleted the steps of the method shown in FIG. 3. That is, the lenderhas offered and the consumer/borrower has accepted the loan at specifiedterms. At this point, the utility will measure or read the powerconsumed or generated by the consumer on a power measuring devices suchas a meter (e.g., meter 30 shown in FIG. 12 at step 100. Thesemeasurements or readings are performed incrementally over a period oftime (periodic power measurements). Most utilities perform readings on amonthly basis. However, the meter may be read at other incrementsincluding, but not limited to, weekly, daily, hourly or other intervalor period of time-based readings (limited only by the physical metermeasurement constraints, regulatory constraints, and automatic metermeasurement constraints).

Depending on the meter used, the power read may be the excess powergenerated by the CPE (power generated that exceeds the power used by theconsumer) or gross power directly off of the CPE. Traditional dialmeters are commonly employed today for reading power consumption. Inmany cases, the utility bills a consumer for the amount of power usedsince the previous meter reading. Many of these meters, however, arecapable of net metering.

There are also bidirectional (or dual meters as discussed below) thatcan simultaneously keep track of power (electricity) consumed and powergenerated by the CPE. In some cases, dual meters are employed. One meteris used for measuring the flow of power (electricity) into the buildingfrom the utility and the other is used for measuring the flow of powerout of the building (generated by the consumer). With dual meteringonly, the power generated is used as collateral. The consumer might paythe power company directly for the gross power they use from theutility. FIG. 13 illustrates an example of power consumed in a dualmetering setting. P₁-P_(N) is the power read on the meter at T₁-T_(N)times, respectively. Note the different price values P₁, P₂, P₃ . . .P_(N) for times T₁, T₂, T₃ . . . . T_(N).

Smart metering systems such automatic meter reading (AMR) systems enablethe utility to measure a consumer's power consumption remotely as wellas more frequently than manual readings at a lower cost. Smart meteringsystems allow the utility to communicate between a meter interfacemodule and a central office via a communications system. Communicationmay take the form of a telephone, power line carrier, radio frequency,internet, cellular or cable television.

Returning to FIG. 12, regardless of the method of meter reading(manually or remotely using smart systems), power measurements are takenincrementally over a period of time. The period may be any desired timeinterval, and power generated by the CPE is purchased by the utility orother entity at step 102. The power may be the excess power or grosspower directly measured from the CPE 10 as discussed above. In the eventof net-metering (one meter), net power consumed at any increment of time(over a period of time) will have a negative value. Excess powergenerated measured at any given increment of time (over a period oftime), however, will have positive values. The polarity of thisconvention may be switched.

As stated above, at step 102, the power generated by the CPE anddelivered onto the power grid is transferred to, converted and/orpurchased by the utility. A billing mechanism may be used to determineon a periodic basis any value of the power generated by the CPE 10(excess or directly off of the CPE 10). (There may also be a financingmechanism for identifying any rebates, credits and/or subsidies for thepurchase of the CPE 10.) The purchase may be in the form of credit,certificate (e.g., New Jersey), cash or security representing value forthe power.

Following step 102, the utility will distribute payments to the lenderdirectly (or alternatively the consumer pays the lender directly asdiscussed below) to fulfill the consumer's obligation to repay the loanat step 104. Specifically, the billing mechanism provides payments orcredits the value for the power generated by the CPE to the lender orother entity for financing of the CPE (financing discussed herein isused to mean loan for CPE purchase but it may also mean purchase, lease,installation and/or maintenance of the CPE 10). Payments will be made atincrements corresponding to meter reading increments. In the currentsituation, the increments are made on a monthly basis. However, themeter reading frequency (period or increments) may vary as desired(e.g., weekly, daily, by minute or other time). While it is possible toincrease the frequency of meter reading using current manual methods,smart metering (or remote meter reading) can make this function morepractical and economical.

In an alternative embodiment, the consumer may pay the lender directlyor the consumer pays the lender or through a servicing agent. Aservicing agent is a third party that collects money and interfaces withthe consumer. In yet another alternative embodiment, the consumer maypay the lender directly until there are payment issues (i.e. theconsumer is late with payments), and then the utility may step into theprocess and pays the lender directly.

In accordance with the present invention, the step of securing the loanagainst the receivables would effectively mean that the securityinterest would be a right in the receivables generated in accordancewith the frequency readings (e.g., on a monthly, daily or other unit oftime basis). Alternatively, in the event the lender chooses to be paidconventionally (paid by the consumer), the receivables may be garnishedat the frequency rate of the meter readings (in the event of a default).

As indicated above, the method of FIG. 3 and related FIGS. 4-13 weredescribed in terms of a loan for purchase. However, the presentinvention contemplates a variety of financing techniques for a varietyof activities including purchase, lease, installation and/or maintenanceof the CPE 10. It is also noted that the method of FIG. 3 may becomputer implemented, manually implemented or a combination of computerand manual implementation.

Reference is made to FIGS. 14 and 15 wherein another embodiment of thepresent invention is shown. The method employs a collateralized powerobligation (CPO) for the cash flow from groups or pools of individualloans described above with respect to FIG. 3. As an example, one groupof pooled loans is shown in FIG. 14 (LOAN #1, LOAN #2, LOAN #3 . . . .LOAN #N). A CPO is similar but not identical to a CMO (collateralizedmortgage obligation), CDO (collateralized debt obligations) or mortgagepass through security. In this embodiment, a security is backed by itsownership of the pool of the individual loans (offered in FIG. 3). Thissecurity or instrument is secured by the cash flow of the pool ofindividual loans as well as ownership in the underlying pool ofindividual loans.

In the CPO (in brief), the regular principal and interest payments madeby borrowers (consumers) could be separated into different paymentstreams, creating several bonds that repay invested capital at differentrates, with different terms. In short, the advantage of a CPO is thatthe original lender keeps the loans on their books only for a shorttime. The loans are resold at a profit to the equity or debt investorswhom will pay more for tranches than the sum is worth. A tranche is aclass of security or ownership interest in a CPO offering. In a CPO, theoriginal lender may become what is known as a packager. The packagermight only hold the individual loans temporarily. Similar to a warehouseline of credit, after a sufficient amount of loans are accumulated tocreate a CPO, the loans are conveyed to a trust or entity that owns theunderlying loans for the benefit of investors that own an interest invarious cash flows.

The consumer/borrower will likely pay the loan in installments composedof both interest and principal. Over the life of the loan, the interestcomponent of payments, which typically comprises a majority of thepayments in the early years, gradually declines as the principalcomponent increases. To obtain funds to make more loans, originallenders or packagers either “pool” groups of loans with similarcharacteristics to create securities or sell the loans to issuers ofsecurities. The securities created from pools of loans are essentially“pass-through securities.” Pass-through securities or bonds represent adirect ownership interest in a pool of loans or the trust or entity thatholds these pools of loans. As the consumers whose loans are in the poolmake their loan payments, the money is distributed on a pro rata basisto the holders of the securities.

In accordance with the present invention, CPOs offer investors a widerrange of investment time frames and greater cash-flow certainty than hadpreviously been available. As indicated above, the CPO issuer assemblesa package of these pass-through securities or bonds and uses them ascollateral for a multiclass security offering (as described above) suchas tranches. The CPO structure enables the issuer to direct theprincipal and interest cash flow generated by the collateral to thedifferent tranches in a prescribed manner, as defined in the offering'sprospectus, to meet different investment objectives.

The cash flow from the CPO collateral may be allocated in a variety ofways. Usually, it is first allocated to meet the interest obligations onall tranches in the offering. Principal repayments, both scheduled andprepaid, are then distributed to the different classes of bondholdersaccording to a predetermined priority schedule which is outlined in theCPO prospectus or offering circular. The tranche receiving principalrepayment is referred to as “active” or “currently paying.” In morecomplex structures, more than one tranche can be paying principal at atime. In addition, there may be fees associated with tranches. Also,different tranches may have difference credit ratings based on riskassessed.

Each CPO tranche has an estimated first payment date, on which investorscan expect to begin receiving principal payments, and an estimated lastprincipal payment (or maturity) date, on which they can expect theirfinal dollar of principal to be returned. The period before principalpayments begin in the tranche, when investors receive interest-onlypayments, is known as the “lockout” period. The period during whichprincipal repayments are expected to occur is called the “window.” Bothfirst and last principal payment dates are estimates based on prepaymentassumptions and can vary according to actual prepayments made on theunderlying mortgage loans. These pass-through securities may typicallyappeal to investors with a certain investment horizon.

As seen in FIG. 14, several payment streams with varying amounts,interest rates and other conditions are shown (Loan #1-Loan #N). FIG. 15illustrates the CPO with several tranches (Tranches_(x)). In general,the CPO may have several arrangements including a fast-pay bond with amaturity much shorter than the total pool, a bond paying interest onlyfor a period that may be fixed on some condition, and a bond payingvariable interest based on an index such as LIBOR, the Prime Rate or anindex based upon US Treasury bills, notes and bonds. Regardless of thebond arrangement, the CPO backed by the type of financial instrumentsdiscussed in this application will have lower risk of default than anindividual loan. The bonds will be secured against or collateralized bythe power proxy, CPE, credit, rebates and subsidies for CPE, CPEattributes and/or the real property on which the CPE is attached (asdefined above).

The CPO described above may have two unique tranches in accordance withtwo different embodiments of the invention. In accordance with oneembodiment, one tranche represents future power/CPE attributes includingemission reduction credits or tradable renewal credits. As part of thecontract with the consumer, consumers will assign to the lender anyfuture carbon credits or renewal energy credits (for example). Thesecredits may be sold in the future in any market that develops for them.

In accordance with the second embodiment, another tranche represents thevalue that might accrue because of the scale or size of the CPO allowsthe CPO to become a larger IPP. In this respect, the CPO may have theright to become a power marketer with the right sell power on the openmarket. Open market value is usually much higher than the prices offeredby the utilities based on PUC dictated pricing. The two differentembodiments of the tranche arise from assignable rights that theconsumer will convey to the lenders.

While the embodiments of present invention described in this applicationare applied to property in the U.S., the methods may apply in anyjurisdiction (US or foreign).

It should be noted that the lender described herein may be any entityincluding a bank, finance company, individual or other entity that islegally authorized to lend money or advance funds. It should also benoted that the embodiments of the method (of the present invention)above applies to solar energy. In alternative embodiments, however, anyrenewable energy source may be used that generates electricity (that canbe valued). Many utilities will purchase electricity from a number ofsources including wind, biomass and hydroelectric (in addition tosolar). The sources of energy can be either renewable or non-renewable.

In summary, the embodiments of the methods described herein offeropportunities for financing the purchase of CPE and other financialrewards that are either not offered by or do not suffer from thedisadvantages of the prior art.

The foregoing description of the embodiments of the invention has beenpresented for purposes of illustration and description. It is notintended to be exhaustive or to limit the invention to the precise formdisclosed and modifications and variations are possible in light of theabove teachings or may be acquired from practice of the invention. Theembodiments were chosen and described in order to explain the principlesof the invention and its practical application to enable one skilled inthe art to utilize the invention in various embodiments and with variousmodifications as are suited to the particular use contemplated. It isintended that the scope of the invention be defined by the claimsappended hereto and their equivalents.

APPENDIX A % of institutions 2003 2003 charging 2003 2001 DefinitionHighest Lowest (2003) Average Average LENDER/BROKER FEES Administrationfee This is a fee charged by $600 $325 14% $336 $413 other lenders tocover some of their expenses. It can range from zero to several hundreddollars. Application fee The fee charged by the $350 $200 18% $205 $266lender to the borrower for applying for a loan. A fee usually paid atthe time an application is given to a lender for helping to complete andreview an application. Payment of this fee does not guarantee that aloan will be approved. Commitment fee Any fee paid by a potential $660$295 2% $498 $268 borrower to a lender for the lender's guarantee tolend money at a specified rate and within a specified time period.Document This is a separate fee that $400 $25 34% $194 $162 preparationfee some lenders or title companies charge to cover their costs ofpreparation of final legal papers, such as mortgage, deed of trust, noteor deed. Funding fee A fee paid for a loan, used $375 $200 14% $228 $126to identify the fee paid to the VA for issuing their guarantee. Also maybe applied to an additional fee paid for funding a conventional loan,typically a commercial loan, at closing. Mortgage broker A charge,usually measured $1,161 $150 46% $839 $344 or lender fee by points, madeby the mortgage broker for originating the loan. Included in closingcosts. Same as loan origination fee for a bank. Processing feeProcessing involves $595 $37 45% $320 $303 validating customerinformation and coordinating third-party findings so that an underwritercan make a decision to approve the application. Once approved, loandocuments can be drawn and the closing can be scheduled. Tax Service feeA search of the Registry of $100 $60 82% $73 $72 Deeds for the county inwhich the property lies is conducted to confirm that taxes on theproperty are paid in full and up to date. Any unpaid property taxes area liability to the lender. Underwriting fee Underwriting covers the $749$100 40% $269 $280 costs of assessing an applicant's qualifications fora mortgage loan. Wire transfer fee When your loan funds, it is $45 $1550% $31 $55 a common practice for a lender to wire the funds to thesettlement provider (escrow holder, title company, or attorney). This isa fast and efficient way to transfer funds in a transaction where timeis crucial. The receiving a Subtotal $5,035 $1,407 $2,993 $2,290THIRD-PARTY FEES Appraisal fee This charge covers an $600 $250 83% $327$269 appraisal report made by an appraiser. Settlement: This fee paysfor the $1,423 $50 93% $445 $374 Escrow/Attorney services of the escrowor settlement agent who handles all the financial transfers, pluspayments associated with the transaction. In some states, an attorneyperforms the functions of an escrow agent, in which case this fee is inpl Credit report fee This fee covers the cost $55 $8.50 81% $29 $37 yourlender incurs in obtaining a copy of your credit report. Your creditreport shows your credit history, and the lender uses this informationto help decide whether or not to approve your loan and how much money tolend you. Flood certification This fee covers the cost $25 $10 95% $17$22 fee (normally $10–$30) of a report to determine if the property isin a flood-risk area as determined by The Federal Emergency ManagementAgency (FEMA). If your home is located in one of these flood zones, youwill be required to secure insurance. Pest & other Termite and residence$200 $30 8% $68 $86 inspection fees inspection. Postage/courier fee Acharge for the costs of $100 $25 81% $45 $45 sending documents tovarious parties using couriers or express mail services. These costs aregenerally based on actual usage and will generally be higher when theprocess is rushed, but some lenders may use a fixed charge. Survey feefee charged for an expert $400 $50 28% $174 $227 examination of theproperty you are considering buying, aimed at discovering any structuralflaws or repairs needed which you may have failed to notice yourself.Title insurance fee Insurance which protects the $2,075 $50 83% $605$460 lender (lender's policy) or the buyer (owner's policy) against lossdue to disputes over ownership of a property. Title work Title search,plat drawing, $625 $25 29% $200 $220 name search. Subtotal $5,503 $499$1,910 $1,740 GOVERNMENT FEES Recording fee A non-tax fee for the cost$220 $23 99% $76 $72 of actually recording a mortgage loan.City/county/state A tax which some localities $6,750 $22.50 33% $1,339$558 tax collect when a mortgage stamps/intangible loan is recorded. Itcan be tax fee significant and is set by state and/or local governments.Subtotal $6,970 $46 $1,415.00 $630 OTHER FEES Reconveyance fees Arecorded document that $45 shows a previous loan has been paid in full.Notary fees This fee covers the cost of having a person who is licensedas a notary public swear to the fact that the persons named in thedocuments did, in fact, sign them. Total $17,508 $1,951 $6,318 $4,659All the estimates were based on a $180,000 loan to an applicant withgood credit who makes a down payment of at least 20 percent on thepurchase of a single-family residence. http://www.bankrate.com/brm/news/mortgages/20031106b1.asp and http://www.bankrate.com/brm/news/mtg/20010621b.asp

APPENDIX B Terms and Definitions

“administration fee” shall mean the fee charged by lenders to cover someof their expenses. The fee can range from zero to several hundreddollars or more.

“administrative security interest” shall mean a security interest in thehousing containing power. This security interest is created byadministrative means, not specified by the Universal Commercial Code(UCC). This may include administratively segregating all the powergenerated over a specific time so that any one lender has a unique claimor security interest in a set amount of power.

“amount of power generated” shall mean the quantity of power produced bya consumer's CPE. The amount of power generated is typically qualifiedover a specific time period.

“amount of power used” shall mean the quantity of power used or consumedby a consumer. This is the same as the amount of power consumed.

“application fee” shall mean a fee charged by the lender to the borrowerfor applying for a loan. The application fee is usually paid at the timean application is given to a lender for helping to complete and reviewan application. Payment of this fee does not guarantee that a loan willbe approved.

“appraisal fee” shall mean the charge covering an appraisal report madeby a third-party appraiser.

“appraisal value” shall mean a monetary assessment or valuation of theproperty appraised.

“appraisal” shall mean the act of estimating or judging the value ofsomething including, without limitation, personal property, realproperty, CPE or other property.

“assignment” shall mean a transfer of any right, interest and/or titlein something of present or future value including, without limitation,receivables, cash flow and payment streams.

“attributes” shall mean the power attributes and/or the CPE attributes.

“automatic meter reading” shall mean the technology of automaticallycollecting data from energy meters and transferring that data to acentral database for billing and/or analyzing.

“balance of the loan” shall mean the amount of unpaid principal on aspecific note or notes.

“bill of lading” shall mean any legal document between a shipper of aparticular good and the carrier detailing the type, quantity anddestination of the good being carried. The bill of lading also serves asa receipt of shipment when the good is delivered to the predetermineddestination. This document must accompany the shipped goods, no matterthe form of transportation, and must be signed by an authorizedrepresentative from the carrier, shipper and receiver. In the context ofthis application, a bill of lading is any document evidencing thetransmission of power from the consumer's CPE to the utility.

“bonds” shall mean a financial instrument with which the investor(lender) loans money to an entity that borrows the funds for a period oftime at a specified interest rate. The indebted entity issues investorsa certificate, or bond, that states the interest rate (coupon rate) thatwill be paid and when the loaned funds are to be returned (maturitydate).

“cash flow” shall mean a revenue or payment stream that changes a cashaccount over a given period. Cash flow can also be defined as themonetary value of the power generated by the CPE over a specified periodof time.

“cash flow security interest” shall mean a security interest in cashflow.

“chattel mortgage” shall mean a loan to buy some personal item or good,the item or good being used as security for the loan.

“city/county/state tax stamps/intangible tax fee” shall mean the taxwhich some localities collect when a mortgage loan is recorded. It canbe significant and is set by state and/or local governments.

“collateral” shall mean any property or asset pledged by a borrower tosecure a loan or other credit, and subject it to seizure in the event ofdefault. Collateral shall include any real or personal propertyincluding, without limitation, receivables.

“collateralized power obligation” (also known as “CPO”) shall mean afinancial instrument or security that is secured by its ownership of apool of individual loans for the purchase of CPE. This security orinstrument is secured by the cash flow of the pool of such individualloans as well as ownership in the underlying pool of individual loans.

“commitment fee” shall mean any fee paid by a potential borrower to alender for the lender's guarantee to lend money at a specified rate andwithin a specified time period

“computer implementation” shall mean the execution of any or all processsteps by computer.

“conditional sales contract” shall mean a contract for the sale of aproperty or an asset where the buyer has possession and use, but theseller retains title until the conditions of the contract have beenfulfilled.

“consumer” shall mean a user or purchaser of power (electricity).

“consumer lending laws” shall mean any and all state and federal lawenacted to protect the consumer from certain illegal lending practices.Usury laws and predatory lending laws are examples of consumer lendinglaws.

“consumer premises equipment” (also known or referred to as “CPE,”“renewable energy consumer premises equipment,” and “renewable energyCPE”) shall mean any thing or characteristic of the consumer premisesequipment (CPE) including, without limitation, CPE attributes and thephysical assets of the CPE (i.e., naked CPE). CPE shall include any andall renewable energy equipment (as the physical assets or naked CPE)purchased or owned by a consumer that resides or is disposed on or neara residential building or business, institution or other real property.CPE also includes any and all mounting equipment. CPE may also bereferred to as Consumer Power Equipment or Consumer Premises OwnedEquipment.

“CPE attributes” shall mean attributes or characteristics of the CPEthat are transferable separate and apart from the actual physical assetsof the CPE. CPE attributes may also be referred to as attributes.

“CPE security interest” (also referred to as a “CPE physical assetsecurity interest” or “consumer premises security interest”) shall meana security interest in the CPE.

“consumer protection laws” shall mean any and all state and the federalenacted laws to protect the consumer (the retail purchasers of goods andservices) from inferior, adulterated, hazardous and deceptivelyadvertised products, and deceptive or fraudulent sales practices.Consumer lending laws are a subset of consumer protection laws.

“consumer risk of default” shall mean the risk that a consumer will failto make payments on a loan.

“consumer's credit information” (also referred to as “consumer creditinformation”) shall mean any information relating to the credit grantedto a consumer permitting the use or ownership of goods or servicesduring a term of payment. In the context of this application, this meansinformation that underwrites the granting of a consumer a loan topurchase CPE. Credit information includes, but is not limited to, aconsumer's FICO score.

“CPE factory guaranteed output ratings” shall mean the guaranteedratings of CPE performance power generation by the manufacture of theCPE over the period of the warranty for the CPE.

“credit report fee” shall mean the cost that a lender incurs inobtaining a copy of a credit report. The credit report shows credithistory, and the lender uses this information to help decide whether ornot to approve a loan and how much money to lend.

“credits” shall mean any money or other valuable consideration offeredto an entity for certain defined acts. Credit is based on the characterof the borrower, the cash flow of the borrower and the collateralpledged (if any) by the borrower.

“cross-collateralized” shall mean a situation in which one or all notessupporting a loan are considered in default merely if one of the notesis in default.

“current market price” shall mean the last reported sale price of afinancial instrument, security or other tradable commodity or thecurrent bid and ask prices of the security or other tradable commodity.

“dealer” shall mean an entity who sells CPE from a distributor to aninstaller or directly to the consumer.

“debt-service-coverage ratio” is a ratio used by lenders in underwritinghow much money to loan to a consumer. This ratio should ideally be over1, which would mean that the consumer is generating enough income (netof expenses) to pay its debt obligations. The debt-service-coverageratio is calculated by dividing the net operating income by total debtservice. For purposes of this application, income is income net ofexpenses such as payments for utilities.

“deed of trust” shall mean a document which pledges real property tosecure a loan by a consumer. The property is deeded by a title holder(trustor) to a trustee (often a title or escrow company), which holdsthe title in trust for the beneficiary (the lender of the money). Whenthe loan is fully paid, the trustor requests the trustee to return thetitle by reconveyance. If the loan becomes delinquent or is in default,the beneficiary can file a notice of default and, if the loan is notbrought current, the trustee can demand that the trustee beginforeclosure on the property so that the beneficiary may either be paidor obtain title.

“default” shall mean the failure to make a payment when due, which canlead to a notice of default and the start of foreclosure proceedings ifthe debt is secured by real or personal property.

“degradation as estimated by industry standards” shall mean an estimateof the gradual failing or loss of power generation of the CPE based onindustry standard relationships of power generated over time.

“degradation as implied by the warranty” shall mean an estimate of thegradual failing of the CPE (loss of power generated) as implied by thewarranty of the CPE.

“degradation of the CPE” shall mean the gradual failing or loss of powergenerated from the CPE over time.

“divided interest” shall mean an ownership interest in only a part of aproperty. The interest in the selected part may be total or partial.

“distributor” shall mean an entity who sells CPE to an installer or adealer.

“document preparation fee” shall mean a separate fee that some lendersor title companies charge to borrowers cover their costs of preparationof final legal papers, such as mortgage, deed of trust, note or deed.

“dual metering” shall mean the use of two power measuring meters, onemeter being used for measuring power consumption by the consumer and theother being used for measuring power generation by the CPE.

“emission reduction credits” (also known as “ERC”) shall mean any award,grant or “credit” that is provided to an entity for the reduction ofemissions or pollutants into the air by implementing more stringentcontrols than required by a permit or an applicable regulation.

“entity” shall mean any person, group of persons, company, division,agency, partnership or other entity (private or government). Entityincludes, without limitation, an installer, dealer, manufacture anddistributor of the CPE.

“escrow” shall mean any documents, real property/estate, money, orsecurities deposited with a neutral third party (the escrow agent) to bedelivered upon fulfillment of certain conditions, as established in awritten agreement.

“excess power” shall mean the power generated by the CPE that exceedsthe power consumed by the consumer. Excess power is also referred to as“net power.”

“expected net present value of net cash flows” shall mean the expectedsum of the present values of the cash flows associated with a CPE and aconsumer.

“expected sunlight” (at the CPE) shall mean the sunlight that ispredicted to shine upon the CPE at a given period of time.

“federal tax credits” shall mean any credits offered by a Federal entityto a consumer to offset any income tax due.

“FICO score” (Fair Isaac Company score) shall mean the mathematicalmodel that is used as a tool by lenders to evaluate the risk associatedwith lending to an entity money.

“financial instrument” shall mean any real or virtual documentrepresenting a legal agreement involving some sort of monetary value.Such financial instrument can be classified as equity based,representing ownership of the asset, or debt based, representing a loanmade by an investor to the owner of the asset. Financial instrumentsshall include “notes.” Financial instruments are also known assecurities.

“flood certification fee” shall mean the fee to cover the cost (normally$10-$30) of a report to determine if the property is in a flood-riskarea as determined by The Federal Emergency Management Agency (FEMA).

“funding fee” shall mean a fee paid for a loan. The fee is used toidentify the fee paid to the VA for issuing their guarantee. Also may beapplied to an additional fee paid for funding a conventional loan,typically a commercial loan, at closing

“future estimated market price” shall mean an estimation of the marketprice of a commodity for example in the future. For the purposes of thisapplication, it is the price that the consumer can sell (or buy) acertain amount of power at a certain point in time.

“future net cash flows” shall mean costs to maintain, and cash flowsproduced by power generated by the CPE.

“general obligation bond” shall mean a common type of municipal bond inthe United States that is secured by a state or local government'spledge to use legally available resources, including tax revenues, torepay bond holders.

“generation capacity (CPE)” shall mean the maximum power a CPE cangenerate in a given period of time.

“green tag credits” (also known as renewable energy credits (RECs))shall mean tradable renewable credits or certificates (TRCs)).

“grid congestion credits” are a mechanism that represents certainbenefits associated with generating electricity from renewable energysources. Grid congestion credits function as a credit or subsidy for areprieve on local grid congestion.

“housing” shall mean any protective cover designed to contain or supportsomething tangible including, without limitation, electricity. Thehousing segregates the electricity (for example) contained in thehousing from other electricity.

“housing security interest” shall mean a security interest in a housing.

“income-to-debt-ratios” is a calculation of a person's monthly payments(minimum credit card payment, student loans, car loan, and in somecircumstances, rent/mortgage) in proportion to your gross monthlyincome. For the purpose of this application, utility bills are monthlypayments.

“independent power producer” shall mean any entity that generateselectricity and then sells the power in wholesale markets (e.g.,California's PX)

“independent power production credits” shall mean the value inaggregating individual consumer power generation and selling it for morethan the value of selling it as un-aggregated power.

“installer” shall mean any party that installs CPE for a consumer.

“interest” shall mean the fee that is charged by a lender to a borrowerfor the use of borrowed money, usually expressed as an annual percentageof the principal.

“intervention” means the ability (i.e., the right) to interfere with aconsumer's ability to use the CPE to generate power.

“intervention security interest” means a security interest in the rightsin intervention in the CPE

“investors” shall mean any entity that commits money to investmentproducts, financial instrument or security with the expectation offinancial returns.

“late fees” shall mean any money assessed for failing to pay an amountdue by a specified period of time.

“latitude” shall mean the angular distance North or South from theEarth's equator measured in degrees on the meridian of a point.

“lending underwriting criteria” shall mean any and all creditinformation (1) furnished by the borrower (consumer) includingemployment history, salary and financial statements, (2) publiclyavailable information including the borrower's credit history, which isdetailed in a credit report, (3) the lender's evaluation of theborrower's credit needs and ability to pay and the consumer's creditscore.

“lending underwriting standards” shall mean the principles by which thelending underwriting criteria shall be judged in connection with therepayment of a loan.

“lending underwriting” shall mean or refer to the detailed rules andcredit analysis preceding the granting of a loan. Such analysis includesa thorough review of lending underwriting criteria.

“loan amount” shall mean the amount of money offered to a consumer forthe purchase of property including, without limitation, the CPE.

“loan” shall mean an arrangement in which a lender gives money to aborrower (the consumer), and the borrower agrees to return the propertyor repay the money, usually along with interest, at some future point(s)in time. Generally the lender has to bear the risk that the borrower maynot repay a loan. A loan is evidenced by a specific financial instrument(or financial instruments).

“longitudinal (longitude)” shall mean the angular distance between apoint on any meridian and the prime meridian at Greenwich.

“long-term lease” shall mean a lease whose term is enough time frominitial signing until the date of expiration or renewal option that isqualifies for tax deductibility.

“manually implementation” shall mean the performance of any method orsteps of a method by manual means (human).

“manufacturer” shall mean any entity that builds and/or assembles aproduct. For the purpose of this application, a manufacture is theproducer of some or all of the CPE.

“market interest rates” shall mean the rate of interest paid on depositsand other investments, determined by the interaction of the supply ofand demand for funds in the money market.

“mixed manually and computer implementation” shall mean the performanceof a method or one or more steps thereof by both manual (human)interaction and computer execution.

“mortgage broker or lender fee” shall mean a charge, usually measured bypoints, made by the mortgage broker for originating the loan. The fee isincluded in closing costs. The fee is the same as a loan origination feefor a bank.

“mortgages” shall mean a debt financial instrument by which the borrower(mortgagor or consumer) gives the lender (mortgagee) a lien on propertyas security for the repayment of a loan.

“naked power” shall mean electricity (i.e., electrons) separate andapart from the power attributes associated with the power. Naked poweris measured in units such as Watts or Kilowatts.

“negative excess power” shall mean power generated exceeding the powerconsumed.

“negative consumed power” shall mean power used by a consumer in excessof the power generated by the CPE.

“net metering” shall mean a mechanism that is used as a utility resourceusage and payment scheme in which a consumer who generates their ownpower is compensated monetarily for the excess of the power generated bythe CPE over the power used by the consumer.

“net cash flow” shall mean the cash flows experienced by a consumerincluding the initial investment in a CPE, costs to maintain, and cashflows produced by power generated by the CPE.

“notary fees” shall mean the fee covering the cost of having a personwho is licensed as a notary public swear to the fact that the personsnamed in the documents did, in fact, sign them.

“note” shall mean a financial instrument or debt security that matureson a date set forth in the note. A loan might consist of or be supportedby one or more notes.

“orientation” shall mean the latitude and longitudinal coordinates ofthe CPE.

“ownership interest” shall mean any interest in a business as ashareholder in a company that carries on the business or partner in apartnership that carries on the business or the sole proprietor of thebusiness, including interest held indirectly through one or moreintervening companies, partnerships or trusts.

“payment streams” shall mean cash flow associated with a CPE.

“perfecting” is a means by which a lender establishes superior rights incollateral against any third parties.

“personal property” shall mean property of any kind except realproperty. Personal property may be tangible, having physical existence,or intangible, having no physical existence, such as financialinstruments. Personal property shall include, without limitation, CPE,CPE attributes, rebates, credits subsidies, receivables and cash flow.

“personal property security interest” shall mean a security interest inpersonal property.

“pest & other inspection fees” shall mean the cost of termite andresidence inspection.

“physical meter readings” shall mean meter readings performed manually.

“postage/courier fee” shall mean the charge for the costs of sendingdocuments to various parties using couriers or express mail services.These costs are generally based on actual usage and will generally behigher when the process is rushed, but some lenders may use a fixedcharge.

“pool of individual loans” shall mean a grouping of individual loans.The individual loans may consist of one or more notes. For the purposesof this application, the purpose of the loans is for the purchase ofCPE.

“power” (also known or referred to as “electricity” or “energy”) shallmean any thing or characteristic relating to power, including, withoutlimitation, power attributes and naked power.

“power attributes” shall mean the attributes or characteristics of powerthat are transferable separate and apart from the actual naked poweritself. Power attributes are also referred to as attributes.

“power attribute security interest” shall mean a security interest in apower attribute.

“power contracts” shall mean a contract between the producer of powerand a resident consumer of power.

“power grid” (also known as the “power transmission and distributiongrid,”

“electric grid” or “grid”) shall mean the network of transmission anddistribution lines (and the step-up and step-down transformers) that isused to deliver electricity to consumers.

“power interruption contract” is a contract between a power generatorand a consumer that allows the provider to interrupt power to theconsumer during peak periods of demand in exchange for betterelectricity rates.

“power proxy” shall mean a representative of the monetary value of powergenerated (over a set time period). Power proxy shall include, withoutlimitation, receivables, cash flow, power, regulatory rights in powergenerated by the CPE and intervention rights in the CPE.

“power proxy security interest” is a security interest in a power proxy.

“power purchase agreement” shall mean an agreement between a powerprovider and a consumer in which the power provider (e.g., utility)agrees to, among other things, reimburse, credit or otherwise pay aconsumer for power generated by the consumer's CPE. Power purchaseagreements typically involve a business consumer and extend for a longperiod of time.

“power security interest” shall mean a security interest in power.

“power usage or power consumed” shall mean power used or consumed over aperiod of time. Its units are Kilowatt-hours.

“principal” shall mean the amount of a debt on which interest iscalculated.

“private activity bond” shall mean a bond for which more than 10% ofbond proceeds are to be used directly or indirectly in a trade orbusiness carried on by persons other than governmental units, and forwhich more than 10% of the debt service on the bonds is directly orindirectly secured by a private business.

“processing fee” shall mean fees involving validating customerinformation and coordinating third-party findings so that an underwritercan make a decision to approve the application.

“progress payments” shall mean payment made as work progresses orpurchases are made under a contract.

“public utility commission” (also known as a PUC) is a regulatory bodyin every state in the U.S. that governs public utilities within itsjurisdiction such as electricity, gas, oil, sewer, water, transportationand telephone service. Some states call it the Public Service Commission(PSC).

“real property” shall mean the land as well as any permanent fixtures onit including buildings, trees and other fixtures.

“real property security interest” shall mean a security interest in realproperty, including without limitation, consumer premises.

“rebates” shall mean a deduction from the amount due or a return of partof an amount given in payment.

“receivables” shall mean any payment, instrument or other valuableconsideration owed to a consumer (or other entity) for the powergenerated by the CPE, whether or not such payment, instrument or othervaluable consideration is currently due. The receivables may be providedby a utility or other entity. Receivables shall include, withoutlimitation, any credit, money certificate or other quantifiable valuefor power generated by a CPE.

“receivables security interest” shall mean a security interest inreceivables.

“reconveyance fee” shall mean fees for recording a document that shows aprevious loan has been paid in full.

“recording fee” shall mean the non-tax fee for the cost of actuallyrecording a mortgage loan.

“regulatory constraints” shall mean the constraints or rules imposed bya governmental entity.

“regulatory rights” shall mean any rights provided by a regulatoryentity.

“regulatory security interest” shall mean any enforceable claim againsta consumer that is created by debiting a consumer's bill.

“remarketing costs” shall mean the expenses incurred in the process ofreselling foreclosed upon CPE.

“renewable energy” shall mean power supplied by energy sources that arenaturally and continually replenished such as wind, solar power,geothermal, hydropower, and various forms of biomass.

“renewable energy source” shall mean sources of renewable energy such aswater (hydroelectric power), wind, biomass and solar energy.

“resale of CPE” shall mean the act of selling the CPE again.

“revenue bond” shall mean bonds whose principal and interest are payableexclusively from earnings of a public enterprise.

“royalty credits” shall mean the cash flow associated with a royaltyinterest.

“royalty interests” shall mean a payment made for the use of property.The payment amount is usually a percentage of revenues obtained throughits use.

“salvage value” shall mean the market value of a depreciable asset(e.g., CPE) at the time it is sold or removed.

“scheduled PUC prices” shall mean the prices planned by a PUC atspecified times.

“securing” shall mean the step or steps of taking a security interest incollateral.

“securities” shall mean financial instruments.

“security interest” shall mean any interest in a property that securesthe payment of an obligation. The property subject to a securityinterest is often times called collateral. Security interests shallinclude attaching the security interest in the collateral and perfectingthe security interest.

“settlement: escrow/attorney fees” shall mean the fee that pays for theservices of the escrow or settlement agent who handles all the financialtransfers, plus payments associated with the transaction. In somestates, an attorney performs the functions of an escrow agent.

“state recordation agency” shall mean the governmental entity of a Statein which a record or other required document should be filed.

“state tax credits” are credits offered by a State to a consumer tooffset any income tax due.

“subsidies” shall mean a monetary grant given by government to lower theprice of a good such as CPE, generally because they are considered to bein the public interest.

“supporting a loan” shall mean character of a borrower, the collateraland associated cash flow.

“survey fee” shall mean the fee charged for an expert examination of theproperty, aimed at discovering any structural flaws or repairs needed.

“tax service fee” shall mean fees for a search of the Registry of Deedsfor the county in which the property lies is conducted to confirm thattaxes on the property are paid in full and up to date. Any unpaidproperty taxes are a liability to the lender.

“third party credits” shall mean credits provided to consumers by thirdparties.

“timing of power generated” shall mean the time at which power isgenerated by CPE.

“timing of power used” shall mean the time at which power is used orconsumed by a consumer.

“title insurance fee” shall mean the fee for insurance which protectsthe lender (lender's policy) or the buyer (owner's policy) against lossdue to disputes over ownership of a property.

“title insurance” shall mean the insurance that protects both the lenderand the homeowner (borrower) against loss resulting from any defects inthe title or claims against a property that were not uncovered in thetitle search and that are not specifically listed as exemptions to thecoverage on the title insurance policy.

“title search” shall mean the process of examining all relevant recordsto confirm that the seller of a property is the legal owner of thatproperty and that there are no liens or other claims outstanding.

“title work fee” shall mean the fees involving title search, platdrawing, name search and the like.

“tradable renewable credits” (also known as TRCs, renewable energycredits, RECs, renewable tradable certificates, green tags, green tagcredits and green tickets) shall mean any and all awards, credits and/orother consideration representing the value for the attributes associatedwith power generated by a renewable energy (“green”) source. Theseattributes can be unbundled (i.e., separated) from the underlying poweritself (naked power) and sold independently as a discrete, tradableinstrument to entities that value “greenness.”

“traditional escrow requirements” shall mean any customary orconventional escrow requirements associated with a transaction involvingreal property.

“tranche” shall mean a class of security or ownership interest in a CPOoffering.

“UCC1 filing” shall mean a UCC1 statement that is filed with thesecretary of state or other designated public official under the UniformCommercial Code (UCC). The document is time stamped, the filing date isnoted, and a file number is assigned, securing the lender's claim to theassigned collateral.

“UCC1 statement” (also known as a financing statement) is a standarddocument under the Uniform Commercial Code, and this document is anagreement between a lender and borrower detailing, among other things,property taken as collateral from the borrower.

“underwriting fee” shall mean fees for underwriting. This covers thecosts of assessing an applicant's qualifications for a mortgage loan.

“undivided interest” shall mean a complete or partial ownership of allparts of a whole. For example, an undivided interest in a pool of loansmeans the ownership or rights to a certain percent of each and everyloan in the pool.

“usury laws” shall mean laws or regulations that prohibits a rate ofinterest on a debt that is exorbitant and in excess of the percentageallowed by law.

“utility” shall mean any entity that purchases, sells or markets powerto (or from) the consumer of power or has the primary relationship withthat consumer.

“utility credits” shall mean any credit offered by a utility, usuallyfor public policy reasons.

“value of attributes of power generated” shall mean the monetaryquantity assigned to the attributes of power generated by CPE.

“value of power attributes” shall mean the monetary quantity assigned tothe power attributes of power generated by CPE.

“warehouse receipts” shall mean any document guaranteeing the existenceand availability of a given quantity and quality of a commodity instorage for safekeeping.

“water reflection” shall mean the image of something as reflected bywater. The image includes sunlight.

“wire transfer fee” shall mean the fee when a loan funds. It is a commonpractice for a lender to wire the funds to the settlement provider(escrow holder, title company, or attorney). This is a fast andefficient way to transfer funds in a transaction where time is crucial.

1. A method of increasing the likelihood of repayment of a loan providedby a lender for the purchase of renewable energy consumer premisesequipment (CPE) by a consumer, the method comprising: (a) coupling theCPE to a power grid operable to receive at least a portion of the powergenerated by the CPE; (b) measuring power generated by the CPE anddelivered onto the power grid; and (c) processing receivables associatedwith the power generated to an entity at times corresponding to powermeasurement to fulfill the consumer's obligation to repay the loan. 2.The method of claim 1 wherein receivables includes cash flow.
 3. Themethod as recited in claim 1 wherein processing receivables includesdistributing at least a portion of the receivables.
 4. The method ofclaim 1 wherein processing receivables includes securing at least aportion of the receivables.
 5. The method of claim 1 wherein processingreceivables includes both distributing a first portion of thereceivables and securing a second portion of the receivables.
 6. Themethod of claim 1 wherein processing receivables occurs at timeincrements that are monthly, weekly, daily, by the minute or over anyother period of time.
 7. The method of claim 1 wherein the powerdelivered onto the power grid is the excess power generated by the CPEthat exceeds the power from the grid consumed by the consumer.
 8. Themethod of claim 1 wherein the power is selectively measured directly offthe CPE.
 9. The method of claim 8 wherein receivables are selectivelyprocessed at times corresponding to power measured selectively off theCPE.
 10. A business method of increasing a likelihood of repayment of aloan, lease or other financial instrument provided by a lender forpurchase, lease, installation, and/or maintenance of renewable energyconsumer premises equipment (CPE) by a consumer, the method comprising:(a) measuring excess power incrementally over a period of time generatedby the CPE and delivered onto a power grid; and (b) processingreceivables associated with the excess power generated to the lender atincrements corresponding to increments that the excess power is measuredto fulfill the consumer's obligation to repay the loan, lease or otherfinancial instrument.
 11. The business method of claim 10 whereinprocessing receivables includes distributing at least a portion of thereceivables.
 12. The business method of claim 10 wherein processingreceivables includes securing at least a portion of the receivables. 13.The method of claim 10 wherein increments associated with the period oftime are monthly, weekly, daily, by the minute or over any other periodof time.
 14. The method of claim 10 wherein the measurements are takenat times in which excess power is delivered by the CPE onto the powergrid.
 15. A method of billing by a first entity for financing renewableenergy consumer premises equipment (CPE) installed on a consumerpremises, the CPE capable of generating power, the power consumed by aconsumer associated with the consumer premises, the method comprising:(a) coupling the CPE to a power grid maintained by a second entity; (b)distributing at least some of the power generated by the CPE to thepower grid; (c) giving a monetary value to the at least some powergenerated by the CPE and distributed to the power grid; and (d) thesecond entity making payment directly to the first entity for thefinancing of the CPE in the amount of the monetary value for powergenerated by the CPE and delivered onto the power grid.
 16. The methodof claim 15 wherein the power delivered onto the power grid is an amountof power generated by the CPE that exceeds the power from the gridconsumed by the consumer.
 17. A method of financing at a purchase pricethe purchase of consumer premises equipment (CPE) suitable forinstallation by a consumer and power generation or power use reductionat a consumer premises, the method comprising: (a) identifying whetherat least one credit or rebate is associated with the purchase and/oroperation of the CPE by the consumer at the consumer premises; (b)taking into consideration subtracting any associated credits or rebatesfrom the purchase price of the CPE; and (c) taking into considerationreselling of the CPE at a market rate, net any remarketing costs, incase of a default by the consumer.
 18. The method of claim 17 furthertaking into consideration attributes associated with power generated bythe CPE, the attributes include one or more of the following: (a)emission reduction credits; (b) tradable renewable credits; (c)independent power production credits; (d) grid congestion credits; (e)royalty credits; (f) green tag credits; and (g) power productioncredits.
 19. The method of claim 18 wherein the credits include one ormore: (a) federal tax credits; (b) state tax credits; (c) utilitycredits; and (d) third-party credits.
 20. The method of claim 18 whereinsuch credits exist now or will exist in the future.
 21. The method ofclaim 18 wherein the attributes include royalty credits, and suchroyalty credits include one or more of the following: (a) an option topurchase some or all of the CPE; (b) a divided or undivided interest inthe CPE; (c) a right to receive a certain amount of power generated bythe CPE; and (d) royalty interests in the CPE.
 22. A billing and paymentsystem for financing purchase, lease, installation and/or maintenance ofa renewable energy consumer premises equipment (CPE) suitable forinstallation by a consumer and power generation at a consumer premises,the billing and payment system comprising: (a) a power grid operable todistribute power to the consumer premises, the power grid furtheroperable to receive power from the CPE; (b) a power measuring deviceoperable to measure power delivered to the consumer premises via thepower grid, the power measuring device further operable to measure powerdelivered onto the power grid by the CPE; (c) a billing mechanismoperable to determine on a periodic basis any excess value of powergenerated via the CPE over power delivered to the consumer premises viathe power grid; and (d) wherein the billing mechanism credits any excessvalue generated by the CPE to an entity that financed the purchase,lease, installation and/or of the CPE up to an amount owed by theconsumer to the entity during a relevant period.
 23. The system of claim22 wherein the billing mechanism periodically bills the consumer for anyobligation of the consumer to the entity beyond the excess valuegenerated by the CPE.
 24. The system of claim 22 wherein the billingmechanism periodically pays or credits the consumer for any excess valuegenerated by the CPE not obligated to the entity.
 25. A system forenabling purchase, lease, installation and/or maintenance of solar powergeneration consumer premises equipment (CPE) suitable for installationby a consumer and for power generation at a consumer premises, thesystem comprising: a financing mechanism that identifies any creditsassociated with the purchase, lease, installation, and/or maintenance ofthe solar power generation CPE, the financing mechanism generatingfinancing for the purchase, lease, installation, and/or maintenance ofthe solar power generation CPE based upon any identified creditstogether with a resale value of the CPE; a power grid operable todistribute power to the consumer premises, the power grid furtheroperable to receive power from the CPE; a power measuring deviceoperable to measure power delivered to the consumer premises via thepower grid, the power measuring device further operable to measure powerdelivered onto the power grid by the CPE; and a billing mechanismoperable to determine on a periodic basis any excess value of powergenerated via the CPE over power delivered to the consumer premises viathe power grid, the billing mechanism further operable to credit anyexcess value generated by the CPE to an entity that financed thepurchase, lease, installation and/or maintenance of the CPE up to anamount owed by the consumer to the entity during a relevant period. 26.The system of claim 25 wherein the financing mechanism generates aspecific financial instrument corresponding to the CPE, the systemfurther comprising a market for trading a plurality of financialinstruments such as the specific financial instrument.